
Class TS 15^ 
Book .^ 3 



Copyright^?. 



COPYRIGHT DEPOSIT: 



WOKKS MANAGEMENT LIBRARY 



PROFIT MAKING 

IN 

SHOP AND FACTORY 
MANAGEMENT 



BY 

CHARLES U. CARPENTER 



NEW YORK 
THE ENGINEERING MAGAZINE 

1908 





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1 ?.C / 30 

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Copyright, 1908 
By JOHN R. DUNLAP 



WAVERLY PRESS 
BALTIMORE 



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PREFACE. 

"Profit Making in Shop and Factory Management" is a concise 
expression of the methods which Mr. Carpenter has developed and 
which he constantly uses in his own practice. They have been tried 
and perfected under the stress of daily operation in the course of his 
experience as supervisor, manager, head of the labor department, 
and president, of various large manufacturing plants, notably the 
National Cash Register Company and the Herring-Hall-Marvin Safe 
Company, of which latter concern he is now chief executive. 

The contents of the book appeared first in the form of a series of 
articles, prepared for and published in The Engineering Magazine 
during the year 1907. As now presented in this volume, they have 
been carefully revised, in some points enlarged, to a certain extent 
rearranged, and a modified division into chapters has been introduced. 
These alterations however are only in details, adapting more effec- 
tively to permanent form the sections which were produced serially, 
and grouping them most advantageously from the closer perspective 
which is given to the reader of a book. The subject matter is un- 
changed in substance, and is even more complete than when it was 
first printed in the Magazine. 

The study of works-management methods will be found to be 
marked throughout by the clear sight, the fair mind, the direct deal- 
ing, and the strong vitality of the author. The whole treatment is 
vibrant with life, the work indeed having been produced amid the 
incessant and insistent claims of active work in the management of 
the great manufacturing company of which he is president and man- 
ager. It is inspired by his keen interest in the promotion of better 
ideals in industrial organization. It is largely a labor of love, freely 
devoted to the advance of the profession of industrial engineering. 
And it bears throughout the stamp of tried, practical success. 

The Editor. 



CONTENTS. 

Chapter I. The Reorganization op a Run-Do wn Concern 

The Necessity for Analysis of Existing Conditions — Advantageous Posi- 
tion of a Well Organized Concern — The Manufacturer with his Eyes Closed — 
The Manufacturer with his Hands Tied — Organizing the Methods of Inves- 
tigation and Analysis — The Usual Defects of Organization, System and 
Methods in Manufacturing Plants — The Superintendent — The Foremen — 
Job Bosses and Workmen — Systems of Pay and their Effect — The Stock 
System — The Order and Tracing System — The Cost System — Machining 
Methods — Defects of the Sales Department — Defects of Executive Con- 
trol 9 

Chapter II. The Practical Working op the Committee System 

No Ready-Made System is a Panacea — Why New Systems so Often 
Fail — Co-operation of the Working Force is Essential — The Human Element 
and the Get-Together Spirit — Formation of the Committee System — The 
General Factory Committee — Its Personnel — Its Work — Its Meetings — 
Subsidiary Committees — Job Bosses' Meetings — General Foremen's Meet- 
ings — The Workmen — Promotions 23 

Chapter III. Reports; Their Necessity and Their Uses 

The Necessity for Reports of Varied Kinds — What they should be and 
what they should Cover — A General Outline of the Essential Reports — The 
Monthly Analyzed Profit and Loss Sheet — The Sales Reports — The Factory 
Reports — The Cost Reports — The Points to be Shown and the Methods of 
Use 36 

Chapter IV. The Designing and Drafting Department 

Results to be Secured — Close Relations with the Tool Room — Require- 
ments of an Efficient Drafting Department — Meetings with the Com- 
mittees — Co-operation with Shop Foremen — Standardization in Design — 
Designing for Cheap Machining and Assembling — Making and Following 
of Drawings to be Invariable — Reports from Machining and Assembly 
Departments — The Use of the Committee System 42 

Chapter V. The Tool Room; the Heart of the Shop 

The Full Functions of the Tool Room — Systems of Tool Supply — 
Speed of Production in the Tool Room of Vital Import — Methods for 
Hastening Production — The Choice of the Foreman — Specialization of 

5 



CONTENTS 

Labor — Standardization — Duplication of Standard Parts — Subdivision of 
Labor — The Small Shop — Speeding up Tool Production and Checking the 
Cost — Tool-Cost Cards — Examples — Method of Use — Tool-Room Commit- 
tee Membership 50 

Chapter VI. Minimizing the Time of Machine-Tool Operations 

The Determination of Standard Times — The Concentration of the Work- 
man's Time on Running his Machine — The Adoption of High-Speed Steel — 
Causes of Lost Time — The Starting Point in Minimizing Operation Costs — 
Investigation of Existing Machinery — Systematic Report upon Improve- 
ments in Old Machines and Recommendations for Replacements or New 
Purchase 64 

Chapter VII. Possibilities Attending the Use of High-Speed Steel 
What Percentage of Increase may be Expected in the Output — The 
Abundant Provision of Cutting Tools — Standard Shapes for Tools — How 
Determined — Forging — Hardening— Form for Records — Cooling — Grind- 
ing — Use of Automatic Grinders 73 

Chapter VIII. The Determination of Standard Times for Machining 

Operations 

The Shop Conditions upon which Standard Times Depend — Tests of 
Times which should be Attained — How to Begin — Classification of Parts — 
The Expert Tester — His Qualifications — Practical Speeds in Lathe Work — 
In Planer Work — In Drilling — Tables—How to Use the Tables — The Com- 
mittee at Work — Requirements for Maximum Production by the Work- 
man 83 

Chapter IX. Standard Times for Handling the Work 

The Elements which must be Considered — Causes of Lost Time in Hand- 
ling — Injuries to Stock or Parts in Handling — The Use of Standard Boxes — 
Standard Places for Stock and Parts — Records of Handling Times — 
Forms — Setting-up Time — Times for Work on the Machines — Time for 
Removing Work from the Machines — The Use of Committee Action 94 

Chapter X. Standard Times for Assembling 

Special Difficulties to be Found in this Subject — Methods of Procedure 
which Succeed — Examples of Results Secured — An Instructive Case 
Described — Foremen's Co-operation Essential — How it can be Enlisted. . . . 101 

Chapter XL Stimulating Production by the Wage System 

The Attitude of the Workman — Mischief Caused by Cutting of Rates — 
The True Theory of Costs — The Wage Problem in Introducing Standard 
Times — How to Get the Workman to Stand for Them — Systems of Pay — 
Day Work — Piece Work — Premium Plan — The Differential Plan — The 
Bonus Plan — Special Modifications of the Bonus Plan Recommended 109 



CONTENTS 7 

Chapter XII. Stock and Cost Systems as a Factor in Profit Making 

The Prime Requisites of a Cost System — What it should Accomplish — 
The Three Fundamental Problems at a Stock System — A Simple and Suc- 
cessful System Described — The Forms and Cards and their Mode of Use — 
Storage Platforms and what they Accomplish — Stock-Tracing and Cost 
Sheets — Forms — How the Data are Used. 116 

Chapter XIII. The Upbuilding of a Selling Organization 

The Various Methods of Selling Manufactured Goods Defined — What is to 
be Considered in Developing a Selling Force — Training of Salesmen — Its 
Possibilities Proved — Development of a Selling System — Salesmen's Demon- 
stration Meetings — A Typical Programme — Modes of Stimulating Interest — 
Salesmen' Training Department — Selection of an Instructor — Prepara- 
tion of a Manual — Reports and their Importance — Forms — Lists — Adver- 
tising 124 

Chapter XIV. Effective Organization in the Executive Department 
Difficulties Peculiar to the Executive Division — The Personal Element — 
The Use of the Report System — Reports from the Selling Division — Forms 
— Factory Reports — Forms — Executive Reports — Forms — The Methods 
Illustrated by an Example and a Typical Programme — The Results 
Secured 138 



PROFIT MAKING IN SHOP AND FACTORY 
MANAGEMENT 

Chapter I. 
THE REORGANIZATION OF A RUN-DOWN CONCERN. 

N the day of prosperity, when manufacturers are behind their 
orders, running full forces night and day, straining every nerve 
to increase production and are further embarrassed by a constant 
influx of new business, the consideration of the problems confront- 
ing a " run-down'' concern and the ways and means of correcting 
its serious defects in organization, methods, and systems might not, 
upon first thought, appear "timely." 

I contend, however, that the present is the time to attack and 
solve these problems. Experience and investigation have disclosed 
an amazing number of concerns which, even under prosperous con- 
ditions, have been having none too easy a time in making headway. 
Many manufacturers today have an uncomfortable sensation of 
uncertainty concerning the progress and profits of the establish- 
ments under their management. 

Any manufacturer feeling the existence of unsatisfactory and 
unprofitable conditions must make up his mind that the real reasons 
for them must be discovered and the causes removed at any cost; 
for should the management, in its conduct of the business, not 
discover its weaknesses, this same management may be sure that 
some thoroughly organized competitor will drive the condition 
to their startled attention when more severe seasons of trade come 
upon us. 

9 



10 PROFIT-MAKING MANAGEMENT 



Necessity for Analysis. 



To solve the problems confronting him, a man must bring to them 
an absolutely unbiased mind and a determination to analyze the 
situation thoroughly and mercilessly, and so to form an accurate 
judgment as to the underlying reasons. You, the manufacturer, 
may be sure that unless your factory, selling, and executive organi- 
zations can stand this test of your coldest and most searching exami- 
nation — your analytical test — with any change from expanding 
conditions of trade, you will rind the foundation of your business 
slipping from under it, slowly perhaps, but surely. 

Advantageous Position of a Well Organized Concern. 

We hear much today of the advantages that one competitor 
secures over another through the "secret rebate," special "shipping 
privileges," unfair "rate classifications," "secret agreements," etc. 
In a manufacturing business these advantages count for little against 
a company with an effective organization of the working force, 
stimulated by a desire to work not only for self but also for the good 
of the concern, aided by up-to-date mechanical methods and modern 
tools especially adapted to the quick, accurate, and economical 
manufacture of the parts to be produced; supported by compre- 
hensive, though simple, systems that enable the management to 
keep an accurate check upon the cost of production, and also enable 
them to determine the proper course to pursue in order to secure 
still greater economies — a system of manufacture that enables the 
management to feel certain that the most economical methods of 
production are being planned and pursued. 

Add to this an efficient selling force, properly trained by modern 
methods, and an economical plan of putting the manufactured goods 
upon the market, and the firm possessing such advantages is in an 
impregnable position. 



first requisites in reorganization 11 

The Manufacturer "With His Eyes Closed." 

In this day, a firm which would hold its own, must adopt the 
most modern methods in organization, method, and system. Repu- 
tation gained in the earlier days of a firm's existence is a valuable 
asset when backed up by modern methods, but amounts to little 
when it is coupled with obsolete ways of doing business. A business 
must progress or slide backward. It cannot stand still. The manu- 
facturer can always feel certain that if he is not progressing some 
one of his competitors surely is. This he may learn to his sorrow. 
The old maxim "a stern chase is a long one" applies with peculiar 
force to business conditions. Once your competitor has built his 
tools for economical production, improved his product, organized 
his forces, and secured the proper start on the market, his sales and 
profits multiply and yours decrease. And the longer you delay 
adopting similar methods, the more the difficulties increase. 

There are still many manufacturers who are not satisfied to give 
their unqualified approval to modern methods in shop and selling 
organization. The number is growing less every day, but there are 
thousands to whom these remarks yet apply. To these the very 
word " organization" implies something mysterious — something big, 
and certainly something expensive. The idea of " organization" 
is not compatible with their idea of economical management. To 
these the idea of "system" is indissolubly linked with "red tape." 
"System" to them means additions to their clerical force, and addi- 
tions to their clerical force means additional dollars spent upon 
"non-producers." They will refuse to admit the advisability of 
systems sufficient to care for their heavy factory interests, and yet 
they have sufficient intelligence to keep up their general accounting 
system. In brief, they do not note the tremendous leaks in their 
factories because they have not sufficient experience or data to enable 
them to know, with any degree of exactness, whether or not they 
are getting proper and economical results from either foremen, 
men, or machinery. A moment's thought must make such as these 



12 PROFIT-MAKING MANAGEMENT 

realize the possibilities of the existence of such leaks, and they may- 
be absolutely certain that where such possibilities exist, unchecked 
and unsystematized, there also exist the losses. 

The Manufacturer "With His Hands Tied." 
There are, however, many manufacturers on the other hand who 
realize that something is wrong, seriously wrong, and who would be 
glad to adopt modern methods if they but knew what they were and 
how to apply them. But to many a man who is intent on improving 
conditions, but who necessarily faces ignorance, prejudice, false 
pride, and stubbornness on the part of those in his organization who 
should help him, the job is appalling. To such, however, as recog- 
nize the conditions and are willing to attack the problem, methods 
can be suggested, the value of which has been proven over and over 
in actual experience under the most distressing conditions. Careful 
investigations, coupled with a thorough campaign of action along 
organized lines, will bring the reward. 

The Reward. 
The reward for such investigation, coupled with vigorous, intelli- 
gent, and tactful action, is so great as to justify the expenditure of 
any amount of labor and time. That it will take time, and in most 
cases a long time, is very true; but that is all the more reason for 
beginning and continuing courageously along steady lines of pro- 
gress, and in such a manner that any backward step would not be 
be possible. The most difficult and discouraging problem to con- 
tend with, next to the difficulty of wheeling the old men into line, 
is that of progressing along new lines, devising and putting into 
effect new methods and new processes and tools, and at the same 
time not interfering with the regular required output. However, 
if the manager is sufficiently impressed by stern necessity to lay out 
plans for improvement, every one upon whom he must depend must 
be impressed with the idea that every day must show some progress, 
however slight, on the part of every one connected with the plans. 



FIRST REQUISITES IN REORGANIZATION 13 

Organizing the Method of Investigation and Analysis. 

As stated before, nothing can be done in any case until the 
manufacturer, and such advisers as are qualified and trustworthy, 
approach the problem in an absolutely unbiased frame of mind. 
They must make up their minds to analyze coldly each and every 
man and situation. The problem may be attacked as outlined here- 
inafter. 

Let us consider first the usual defects in organization, system, and 
methods, in their order, and attempt to discover the "sticking points" 
in each division. They may be classified as follows: — 

1. — Defects of factory organization, dealing with the superintend- 
ent, the foremen, the job bosses, and the workmen, and the usual 
methods of management. 

2. — Defects of systems and methods of manufacturing. 

3. — Defects of sales organization and executive control. 

The separations made here are important ones and should be 
considered as thoroughly in the case of the concern with fifty men 
as in the case of the one with five thousand. 

If you are interested, take these divisions item by item and 
make a faithful memorandum of the defects under each heading 
that you alone know of. If you have such a knowledge of the busi- 
ness as you should have you will be surprised at the number of 
your notations. Then when you come to the headings of those 
processes with which you are not familiar, secure the advice of com- 
petent persons in each line and observe the extent and character of 
your notes. 

I. Defects of Factory Organization. 

The Superintendent. 

Singularly enough, the method of management usually adopted 
is that of placing all the responsibility on the shoulders of one super- 
intendent and failing to surround and strengthen him with a small 



14 PROFIT-MAKING MANAGEMENT 

body of the most efficient foremen, who might prove to be advisers 
of great value to him. In adopting such a method, the manage- 
ment fails to recognize the great benefit to be derived from securing 
the best advice of a small group of the best qualified men upon most 
important subjects, and from giving its foremen an opportunity 
to increase their knowledge of the business and so to grow to be of 
greater worth to the concern. The stimulus to the ambition of the 
foremen because of the opportunity so to show their worth is thus 
lost. Instead of these men being moved by the hearty desire to 
co-operate with the firm and with each other " for the good of the 
company," they are usually impelled by feelings of jealousy and 
impair the efficiency of themselves and the entire organization by 
their backbiting and faultfinding. 

And yet with any method of organization there must be a head 
and a strong one. A " cheap" superintendent is dear at any price. 
A strong and capable man in this position is usually worth any 
reasonable amount necessary to secure or retain him. A large 
manufacturer once said: "My $20,000 superintendent is the cheapest 
man I have." In reply to the expected "Why?" he said: "He's 
my ' dividend maker.' I tried 'em at $3,000, $5,000, $10,000, only to 
keep on losing. Finally, I made up my mind I wouldn't pay less 
than $20,000 — got my man, and he's bringing my dividends. Cheap 
at $20,000." 

The Foremen. 

The most important men in the shop. You may have the best 
qualified superintendent, but if you have inefficient foremen, you 
have poor management; you may have the best machinery — but 
with inefficient foremen, poor results; the best systems — complica- 
tion; the best desires toward your workmen — your poor foremen 
bring upon you labor troubles galore. 

When one stops to consider that these are the men who come into 
daily touch with your workmen — that they practically control the 
shop life and shop destinies of your men on machines and bench — 



FIRST REQUISITES IN REORGANIZATION 15 

that to them falls the responsibility of getting the best results from 
the workmen, and upon their knowledge you must depend when it 
comes to the question of getting the proper and best results from 
the machinery you have bought — is it not absolutely true that they 
are the most important men in the shop, and that their methods, 
their intelligence, their experience, are questions most vital to you 
and your business? 

Usual Methods of Appointment and Development. — And yet 
what are the facts in many cases? The foreman is often a former 
machine hand promoted to this position because of superior intelli- 
gence, diligence, and desire to please. This man, who should have a 
wide and thorough experience in modern machine practice, is often 
simply a graduate of your own shop, with experience limited to your 
routine practice. 

The Proper Type. — The foreman should have a thorough knowl- 
edge of the best mechanical processes and the types of machines best 
suited for the work he handles. He should have also a wide knowl- 
edge of the tools, such as jigs, milling fixtures, dies, etc., best adapted 
to his work, and of methods of using them so as to procure the 
greatest economy in production; and, last but not least, the ability 
to handle men and get the best from them. Am I setting too high a 
standard for the foreman? I say No ! positively No ! These are the 
men who can "make or break" the concern. As is the foreman, so is 
the department. In nine cases out of ten, he is your "Sticking Point," 
or is responsible for it, be it poor workmanship, high costs, tardy pro- 
duction, or trouble with your workmen. This is as true of the small 
shop as of the large one. 

Therefore, select him with care, watch him and help him, edu- 
cate him, and, above all, give him the stimulus of "his chance" 
and watch him grow, if he is the right kind. 

True it is that in the most modern shops the tendency now is to 
depend less and less upon the foremen on the important questions 
of speed of machines, types of tools, setting of standard time, and 



16 PROFIT-MAKING MANAGEMENT 

proper prices on jobs. The best practice in the up-to-date shop is 
to institute speed bosses, rate-making departments, and tool and 
tool-designing departments, entirely independent of the foremen. 
In fact, as will be brought out later, such plans, properly instituted 
and carried out, will accomplish wonders; but this course is rendered 
necessary because of the weakness of the ordinary foremen. But 
in most shops it is hardly possible to consider such elaborate, though 
extremely valuable plans amongst the first steps. Depend upon 
your foremen you must. Even though the greater plan of organiza- 
tion with speed bosses, rate-making departments, etc., may be 
determined upon, this consideration of the foremen's efficiency is 
equally necessary. In fact, the broader plan will utterly fail unless 
it is supported by the intelligent efforts of the heads of depart- 
ments. 

The Management's Representatives. — Never forget that the fore- 
men are the management's direct representatives to the workmen. 
The men form their opinion of the company from their opinion of 
their foremen. Their daily life and career are subject to his control, 
his whims and vagaries ; their promotions and increases in pay depend 
upon his characteristics and knowledge. They more often have 
reason to depend upon his practice of favoritism than upon his sense 
of fairness. The character and ability of the foremen affect the 
workmen more directly than any other three factors in the shop 
organization and management, and as a consequence have a direct 
effect upon their output and disposition toward the company. 

Job Bosses and Woekmen. 

In any shop organization, however small, the question of the 
proper division of the working force, so that the proper amount of 
supervision can be given to each man or group of men, must receive 
careful attention. A foreman cannot properly oversee his entire 
department without assistance and still give his attention to the 
larger and more important details of his work. The usual method 



FIRST REQUISITES IN REORGANIZATION 17 

of securing this result is to appoint the more efficient members of 
the working force " job bosses" with some limited degree of authority 
over a small group of men. These men perform their share of the 
work, receiving a slight increase in their pay. 

The importance of carefully selecting these men is at once appar- 
ent. They are usually the next in line for advancement to assistant 
foremanship. From these men come your heads of departments. 
And yet how many managers or shop superintendents possess accu- 
rate information concerning the character and ability of their 
job bosses? They usually promptly pass over to the foremen the 
responsibility for making these selections, and very often they in 
turn just as promptly pass the coveted position to some favored 
friend without much regard to the matter of his ability compared 
to that of the rest of the group affected — or, to drive the thought 
harder home — without regard to the ability and intelligence of the 
rest of the candidates for promotion. Advancement in wage and 
authority is as important to the $1.50 per day workman as it is to 
the superintendent. It is the neglect of just such points as these 
that cause workmen to feel that merit and hard work count for little, 
and that extra effort brings no reward in the face of an unfair 
foreman's selection of his friends and favorites for the only progress 
that is possible to them. 

System of Pay and its Effect Upon Workmen. 

Of equal importance in its direct effect upon men is the question 
of the " system of pay" and the method of handling it. Little will 
be said at this point regarding these matters. However, in consider- 
ing the defects directly affecting the workmen and seriously affecting 
the cost of production in many forms of business, the first prize 
(for total inefficiency) may usually be given blindly to the pay 
system without much danger of going amiss. 

The average system, usually piece work, started by men little 
versed in modern methods and based upon data usually secured by 



18 PROFIT-MAKING MANAGEMENT 

the foreman by methods "strictly their own" — and as often totally 
incorrect — supplies a first-class millstone to burden any concern. 

Little faith can usually be placed in the average foreman's esti- 
mate of a "fair price" for a job. Lacking proper knowledge him- 
self, he will, however, unhesitatingly and with a great display of 
confidence, place a price upon any piece of work. Then follows the 
old story of, first, excessive earnings by workmen; second, dissatis- 
faction on the part of the employer, and consequent reductions in 
price; and, third, the invariable result of discontented workmen, 
who find that their only protection from reductions in price lies in 
the strict adherence to a certain limited rate of earnings and hence 
of production. The foremen continue blithely to set the prices, 
the employer suffers unconsciously through excessive costs and 
limited output, and the workman works away discontented and 
determined to even up matters for unfair treatment. These con- 
ditions are still very prevalent. 

It is astonishing to note the manner in which otherwise sensible 
men will put into effect and enforce methods and policies vitally 
affecting the workman's daily life, without regard to the "human 
element" that enters into his makeup and that the manager should 
know must of necessity be reckoned with. 

Much has been said about the tendency of the modern workman 
to limit his output and not put forth his best efforts to improve 
either himself or the company's product. This complaint, however, 
generally comes from the manufacturer who does not consider it 
worth while to give close attention to such details as are mentioned 
briefly here. Seldom is it heard from the manager who wisely 
"puts himself in the other fellow's place," and then builds up his 
plans along lines that he realizes would mean encouragement and 
inspiration to him were he in that other fellow's place. 

Any man who has sufficiently clear vision to recognize such faults 
existing in his business must make up his mind to start right in at 
the bottom and build up. No points can be neglected. The faults 
in organization and methods mentioned in this brief outline, if 



FIRST REQUISITES IN REORGANIZATION 19 

existing, must be eradicated before any permanent or really effective 
improvement can result. 

II. Defects of Systems and Methods of Manu- 
facturing. 

It is not my intention to do more at this point than to point out 
the most serious defects of the ordinary systems, as the succeeding 
chapters will deal with the defects and suggested methods of better- 
ment quite fully. The need of system is, of course, becoming more 
widely recognized each year. But in many cases the manufacturer 
stops just short of full success. Many times he also fails to realize 
the full purport of his system and to reap the full, and, in fact, the 
greatest benefit possible from it. 

The Stock System. 

To the manufacturer who is not thoroughly awakened to modern 
possibilities, the stock system is simply a means of keeping track of 
his stock. It may never occur to him that it is possible to develop 
it easily so that he can cut down his necessary working capital to a 
minimum and reduce his interest account to the lowest point possi- 
ble, or that, by a little development and attention on the part of 
several intelligent men, monthly inventories correct within 1\ and 
2 per cent can be easily secured and made the basis for an exceedingly 
valuable factory profit-and-loss sheet, so that factory conditions 
can be accurately noted monthly. 

The Order and Tracing System. 

The order and tracing system are often considered "necessary 
evils," and yet the great success of many a concern depends upon the 
promptness in filling orders and keeping delivery promises, and the 
tracing system is responsible for this. 

The tracing system as an aid in keeping down stock investment 



20 PROFIT-MAKING MANAGEMENT 

through keeping the regular stock constantly moving is also often 
a new idea. 

The Cost System. 

The possibility of ascertaining the cost of the article is often the 
only thought in the manufacturer's mind when the "cost system" 
is mentioned, and is accordingly its only function that is developed. 
In fact, however, the valuable analyses of costs, operation by opera- 
tion, to be secured from an efficient cost system, supply the manager 
with invaluable data from which to work in reducing costs. Nor does 
their effectiveness stop here. If it is decided to start a campaign to 
increase the efficiency of the factory force and to eliminate the inef- 
ficient men, then the individual records of the man will be secured 
from the cost records. In large bodies of workmen, a steady and 
intelligent campaign along these lines will work wonders. 

While to some this last point may appear to be an unnecessary 
refinement, it must be admitted by all that a cost system must pro- 
vide a method of cost analysis which will unerringly reveal the points 
of high and excessive costs throughout every stage of manufacture. 
The failure to accomplish this means the failure of the chief function 
of any cost system, namely, making possible the greatest economy in 
manufacture. 

Linked up closely with the cost system is the "system of pay" or 
the wage system already touched upon. This will be handled fully 
later, but must be mentioned now because of its great importance. 
It, and the "method of organization," form the two pillars upon 
which rest the whole framework of a successful concern. Any weak- 
ness here is felt throughout the entire structure. 

Machining Methods. 

Closely linked up with the cost system and wage system are the 
shop processes of production, such as machining, assembling, etc. 
The lack of system in the first two almost invariably means a 



FIRST REQUISITES IN REORGANIZATION 21 

deplorable lack of proper results in the shop processes of production. 
The lack of accurate information relative to the amount of work that 
can and should be turned out from a first-class tool is astounding. 
In many shops it is only another case where those methods which 
vitally affect the cost of production are "up to the foremen," and 
the foremen, lacking knowledge and experience, cheerfully run their 
departments year in and year out, satisfied if they turn out sufficient 
volume to keep the "super" off their trail. 

In my own shops before they were reorganized I have seen cases 
where one department was operating the machinery at such cutting 
speeds and with such depths of cut as to show a loss of 21 per cent 
when compared with another department directly beside it but under 
another foreman. And, at that, both departments were far below 
the standard of efficiency they have now attained, and the end has 
not yet been reached. 

In this matter understand me clearly. The average foreman wants 
to do well and to make a good showing. But he cannot but lack the 
desired (and indeed necessary) training and experience to secure 
proper results. The only proper method of handling these men is 
to train them. It can be done. It has been done with fine results. 
Necessarily, then, this vital information as to what should be pro- 
duced from any one machine is usually lacking "in the front office." 

I recently installed in certain factories several large boring mills 
and heavy planers built by two of the highest grades of manufac- 
turers. In order to test the amount of knowledge possessed by the 
manufacturers of these machines, they were called upon for advice 
as to the best results that could be secured from them when working 
under differing conditions. Simple questions were asked as to the 
speed and depth of cut possible in order to secure the best results. 
These builders of the tools could not give a definite answer that 
would be of any material assistance to any one needing light. They 
knew that their machine tools ran as fast and " would turn out as 
much work, etc.," as any in the market, but when it came to the 



22 PROFIT-MAKING MANAGEMENT 

question of shapes of tools, depth of cuts, results upon differing 
grades of metal, results from the use of water and composition on 
the tool, etc., they floundered hopelessly. The lack of knowledge 
of the best results obtainable is not by any means confined to the 
older type of shops. There is many a factory today which to the 
eye presents a modern appearance, with its new buildings, well venti- 
lated and cleanly, its fine equipment in machinery and tools, and its 
show of bustle and hustle, which yet needs the " doctor's care" badly. 
The shop, whether new or old in appearance, operating under the 
older methods of obsolete of obsolescent wage and shop systems, 
hampered by lack of accurate knowledge of best obtainable results 
in up-to-date processes of production, by lack of progressiveness 
and lack of " pulling for the good of the company" spirit in the work- 
ing organization, is far behind in the race for commercial supremacy. 

III. Defects of Sales Department and Executive. 

The Sales Department. 

Thorough and careful consideration of sales-department methods 
is considered essential in this discussion. A full study of any business 
is incomplete if the sales-department methods are neglected. For 
the " production of orders" is a most essential link to the chain. 

The possibilities of scientific development in this branch of the 
ordinary business are so great that they must be carefully studied. 
To this statement I often hear the manager say: "Scientific develop- 
ment of the selling end of the business ! Why ! a salesman is a sales- 
man. The selling of the goods is an art in itself. A matter of 
individualism. Salesmen are born, not made. Training of sales- 
men! Bosh!" 

The managers who make such statements are usually of the type 
that will employ a new salesman, let him " dig around the shop a bit," 
give him a catalogue and start him out. A mere " taking of orders 
on price alone," not a finished salesman. For the gulf of difference 



FIRST REQUISITES IN REORGANIZATION 23 

between a man who takes orders because he quotes lower prices than 
his competitor, and the salesman who sells the goods at a higher 
price than his competitor because of his skill and knowledge of his 
business, is a very wide and deep one. That there is a " psychology 
of salesmanshp" I would be the last one to deny. But innate selling 
ability, unless backed up by proper knowledge, will not win. Add 
to natural selling ability a thorough training in the "talking points" 
of the product, the defects (and good points) of the competitors, 
the best methods of meeting arguments and objections, gained from 
the experience of all the best men in the selling organization, the 
most successful means of demonstrating the merits of the goods to 
the prospective customer — and you have a strong salesman. 

Train your men collectively, thoroughly organize them along 
scientific lines, and then back up your training by simple yet ade- 
quate systems whereby you may know that the territories are being 
completely covered, your prospective customers are being handled 
properly, profitable prices being secured and competition being met, 
and you will have an invincible selling organization. 

Instead of this condition, one often sees a group of salesmen, 
jealous and distrustful of each other, lacking in the desire to work 
together for the good of the company, without a thorough knowledge 
of the company's goods or their competitors' product, and very 
chary about sharing what knowledge they do possess either with 
each other or with the poor newcomer. Usually the firm itself is 
almost entirely responsible for such conditions. 

The possibilities that lie in the development of proper methods are 
astounding. Actual experience to be described in later chapters 
has proven it beyond the peradventure of a doubt. 

The Executive. 

The weaknesses outlined in the preceding pages will surely be 
felt in the executive division whether that consists of one man or 
twenty. With the possibility of securing only such insufficient 



24 PROFIT-MAKING MANAGEMENT 

data as can be obtained with lack of organization, methods, and 
systems, such as has been outlined, what can the executive do but 
struggle along in the dark and in doubt, trusting that his untrained 
salesmen can sell his product for such a price that a reasonable profit 
will be shown after his factory, without proper organization, sys- 
tem, and training, has produced? In passing, let me state again that 
there is many an executive today who, not realizing the ineffi- 
cient condition of both branches of the organization, wonders what 
there is wrong with a business that apparently is in good condition 
as far as surface conditions are concerned. To such I say analyze 
the business to the uttermost. Compare it with a modern concern 
with an organization built upon lines that inspire the workers in it 
to give their best knowledge and ability to further its progress, 
with methods that ensure the best results in cost and volume, and 
systems that will not only tell the story of progress but also indicate 
the " Sticking Points" — and then begin to build along proper lines. 
And when the work is once begun, never let up; fight it out to a 
finish. It will pay. 



Chapter II. 
THE PRACTICAL WORKING OF THE COMMITTEE SYSTEM. 

/CONSIDERATION of methods for " curing industrial ineffi- 
^-^ ciency," or for increasing such efficiency as we may already 
have in the factory, will be much simplified if we keep in mind the 
classification of defects given in the preceding chapter. If we get 
the causes of loss clearly recognized and logically grouped for study, 
we can easily see what must be done (and what must not be done) to 
change these harmful conditions and to secure the much desired 
improvement. 

This classification of the sources of loss and waste in a manufac- 
turing business was : — 

1. — Defects of factory organization — of the superintendent, the fore- 
men, the job bosses, and the usual methods of management. 

2. — Defects of manufacturing systems and shop methods. 

3. — Defects of the sales organization and sales methods, and of 
executive control over the entire business. 

Let us understand fully at the outset that there is no infallible 
panacea — no ready-made "system" which will fit all cases alike. 
Methods must be suited to the circumstances of the particular shop 
or department. The first thought in regard to any plan, indeed, 
must relate to its adaptability to existing conditions and processes, 
and to the character and ability of the existing men in the organiza- 
tion. Their sympathetic support must be secured, whether the new 
plans affect methods of organization, systems, or shop processes. 
The most thorough and effective system in existence will not bring 
the degree of success that should be attained unless it is supported 
by superintendent, foremen, and job bosses — and workmen. I hap- 

25 



26 PROFIT-MAKING MANAGEMENT 

pen to know of five cases, of importance because of the size of 
the concern and the thousands of dollars that were wasted, where this 
mistake was made and failure resulted. 

The new systems all "cut and dried," were figured out carefully 
"on paper," new printed forms were prepared, the old forms de- 
stroyed, and the start made. The men introducing them, desiring 
to retain the full credit and glory for the innovation, made the mis- 
take of refusing to call in the different members of the organization 
and trying to secure their support, but instead attempted to force 
their pet plans through. They met with instant though covert 
opposition. Unexpected obstacles suddenly blocked the way — ob- 
stacles not apparent to the investigator, but which lay hidden 
away amongst existing shop processes and methods that could not 
be changed, waiting to spring up and prevent the longed for pro- 
gress — all of this to the delight of the men in the departments, who 
chuckled to themselves (and to each other) because of trouble arising 
from some difficulty with which they were thoroughly acquainted, 
but concerning which they said nothing "because they weren't 
asked." 

In one case in particular where the system required an especially 
large expenditure, its introduction was apparently successful though 
accomplished after many a hard wrench and pull. However, this 
apparent success lasted only so long as the devisers of the plan were 
on the ground to see that its vital points were not neglected, its 
essential features not abandoned. But when they left the shop and 
their pet system to the tender care of the old organization, there 
began a process of disintegration, imperceptible but effectual. The 
tendency of the workers to abandon gradually methods with which 
they possibly were not altogether familiar, and certainly not in 
sympathy, was practically irresistible. Little by little they slipped 
back, giving up one idea after another, until the result was a hetero- 
geneous mass of methods, part belonging to the new system, part to 
the old, the final condition being worse than the first. 



THE COMMITTEE SYSTEM 27 

Oftentimes lack of knowledge of details leads a manufacturer to 
entrust the important work of reorganization to those who can talk 
the loudest and make the greatest show of a little knowledge. So 
important is this work, however, that it may well claim the closest 
attention on the part of the manager himself. The "show me" 
attitude is nowhere so important. If you don't know or under- 
stand, stay with the problem until you do. Don't let anyone else 
decide these important things for you. 

The support, the co-operation, of the men forming your organiza- 
tion is, then, essential. To enlist it, they must have some part in 
forming the plans, some share in devising the systems. They must 
be made to feel that the methods are their own. They must be con- 
sulted frequently and thoroughly concerning the difficulties and 
encouraged to suggest ways of overcoming them. If some com- 
prehensive plan that will ensure this result — such, for example, as 
the committee system — can be worked out and put into effect, the 
difficulties will quickly disappear and ways and means for over- 
coming the "unexpected obstacles" will soon be found. 

With these fundamental principles clearly in view — (1) that re- 
organization plans must be adaptable to the conditions of the 
business, and (2) that they must enlist the co-operation of the 
personnel — we may lay down three ruling ideas which must govern 
the manufacturer in introducing new profit-making methods into 
his factory: — 

1. — All plans must be based primarily upon recognition of the 
human element of the men who are affected. Always keep in mind 
this: "How would I act were I in the other fellow's place, with his 
limitations of knowledge and experience, and what plans would be 
most likely to elicit my support, develop my latent ability, and bring 
out the best that is in me for the support of the company?" 

2. — The plans must be developed along the lines of the modern 
"get-together spirit." The facts must be recognized that, nine 
times out of ten, the joint advice of five men conversant with a sub- 



28 PROFIT-MAKING MANAGEMENT 

ject is immeasurably superior to any plan developed from one 
man's brain; that the only possible method of developing a proper 
shop spirit is through getting the men together; that you can elimi- 
nate their distrust and jealousy of each other only by bringing them 
into close contact one with another, handling them tactfully and 
showing them they are "not such bad fellows after all," that the 
spirit of "helping one another for the good of the company" can 
only be brought forth through the spirit that develops from coming 
together; that the feeling of concerted action on subjects vital to the 
company's welfare can be cultivated — gradually, perhaps, but 
easily — if the proper attention is paid to it. 

3. — Thoroughly developed methods of overseeing and checking 
up production conditions, both as to volume and costs, are vital. 
System provides these for the management. The heads of a con- 
cern cannot see everything, but they must come "mighty near 
knowing everything," or at least be in a position to scent danger, 
locate it, and eradicate its cause promptly. 

Hence the systems for the factory, sales, and executive divisions 
must be developed with the idea of providing the heads of a con- 
cern with accurate methods of overseeing the entire company; 
systems which will provide an executive, possibly totally ignorant 
of factory or sales processes, with data sufficient to enable him to 
lay his finger on the " Sticking Point," whether it be excessive costs, 
overproduction, delayed shipments, or unprofitable sales. 

FOEMATION OF THE COMMITTEE SYSTEM. 

And now we come to the initial step — concrete, definite, and sim- 
ple — by which the human factor is recognized, the spirit of co-opera- 
tion is fostered, and the idea of order and system is implanted. 

It is evident that there is but one way to secure the advice on vex- 
ing problems of those best qualified to counsel, and also to stimu- 
late these men to give the company the best that is in them. That 
is by forming "Standing Committees," to handle matters pertaining 



THE COMMITTEE SYSTEM 29 

to routine production and to solve other important problems such 
as those relating to progress, invention, and economies in production, 
and promotions. 

In each factory the problems relating to the foremen who would 
naturally form the committees, and to the work, vary so as to make 
any hard and fast rules out of the question. But in ninety-nine 
cases out of a hundred the factory superintendent, naturally the 
final authority in all cases, should be the chairman of the most 
important committees. In the case of large concerns, where the 
superintendent would naturally have several assistants, these may 
be the heads of the less important committees, though in many cases 
the work of the committees renders the assistant unnecessary. The 
superintendent himself in all cases, however, should be the head of 
the Main Factory Committee. 

I find that six men form the ideal committee as to size. Any larger 
number than this is liable to prove unwieldy. 

These committees are in all cases of an advisory character. 

The General Factory Committee. 

There should be first a General Factory Committee, with the 
superintendent as chairman, formed to care for the most important 
questions arising in a shop. The members of this committee should 
be selected with great care, and with a view to having the brighest, 
most progressive men in the shop upon it. While of course it is 
advisable to consider the character of departmental work in charge 
of the different men when making the selection, so as to have experi- 
enced men on the committee, at the same time a serious mistake 
will be made if this is the only point observed when choosing them. 
Ordinarily, the personnel may well consist of the chief designer of 
product, the chief designer of tools or the head of the tool room 
(preferably the latter), the head of the cost department, and two or 
possibly three foremen. In the case of assistants, these should 
form part of the committee. They, however, should not take the 



30 PROFIT-MAKING MANAGEMENT 

place of the foremen, even if it be necessary to increase the number on 
the committee. Accurate notes of actions taken are of course 
necessary. A capable stenographer to act as secretary is always a 
valuable adjunct. Further, an efficient secretary can straighten 
out many a difficulty between meetings, and the knowledge of shop 
conditions he absorbs is of great value. 

Work of this Committee. — As stated before, no hard and fast 
rules can be laid down relative to the work of this committee; but, 
generally speaking, it can well consist of the following : — 

1.— Plans to standardize product, and consideration of new 
methods of design. 

2. — Consideration of actual progress made upon new ideas already 
introduced into the factory. (A most important subject; for the 
way in which valuable ideas, bravely begun, can be totally buried 
and lost sight of in the press for the necessary everyday output, is 
often discouraging.) 

3. — Consideration of possible economies and the systematic plan- 
ning of reduction in cost. The mere starting of a general discus- 
sion often opens up a surprisingly large field for this highly import- 
ant work. Reports by foremen upon economies, decided upon at 
previous meetings, and assigned to them to put into effect, should 
invariably be required. 

4. — Consideration of routine work, both stock and contract, and of 
progress upon it. Thorough weekly reports fully covering this 
subject are of the greatest importance. 

5. — Promotions. While naturally the superintendent should be 
the final authority to act upon promotions, the plan of having this 
committee pass upon them in an advisory manner proves most 
salutary. Not only is the management thus assured of the best 
possible selection of men for important positions, but also the worker 
far down in the ranks will feel the effect of appointments based upon 
merit, and free from any taint of unfair influences of relationship or 
personal friendship. 



THE COMMITTEE SYSTEM 31 

Meetings. — The number of meetings to be held will depend upon 
the character of the business — usually two a week will suffice. But 
one point should be insisted upon: There should be stated times for 
these meetings and nothing should be allowed to interfere with them. 
The tendency to slight the meetings after the plan has been in effect 
for a time and has straightened out the kinks is very strong. 

Subsidiaky Committees. 

Most companies manufacture several different lines of product, 
or a number of important variations upon this product. Each line 
should have its own committee. 

The men forming the Factory Committee should act as chairmen 
of these different Subsidiary Committees, their selection being deter- 
mined by the character of their work and their experience. Each 
committee should be made up of the foremen handling that particu- 
lar line of product. Very often other members of the Factory Com- 
mittee, and especially the tool designer or tool-room foreman and 
cost man, should be called into these meetings, where possibly the 
same stenographer should act as secretary as in the case of the 
Factory Committee. At first glance, this may seem an unimportant 
point; but it is not so, by any means, when you consider how much 
information of great value to a first-class superintendent a bright 
man in this position will absorb. 

Work of these Committees. — While the work of each of these 
committees is naturally restricted to the details connected with one 
branch of production, still the work done by the Factory Committee 
as applied to that particular line will naturally be handled by it. 
Important matters for consideration would be : — 

1. — Standardization and new designs. 

2. — Progress on new ideas already introduced, with reports from 
the foremen responsible for pushing them. 

3. — Consideration of possible economies and reduction in costs. 
Full reports from foremen upon assignments relating to this work. 



32 PROFIT-MAKING MANAGEMENT 

4 — Routine work, its condition and progress, with reports from 
foremen responsible, showing whether or not each job, be it stock 
or special contract, is making proper progress so as to meet delivery- 
dates. 

Job Bosses' Meeting. 

Naturally, the next step is that the foremen shall hold meetings 
with the job bosses/ Some may think this an unnecessary refine- 
ment of the committee system. I regard it as an important link in 
the chain. Naturally, these men cannot be taken away from their 
work very often without crippling the output; but short and sharp 
meetings with them every two weeks are strongly advisable, for 
necessarily upon these men ultimately falls the responsibility for 
pulling many a project through successfully. Many a cherished 
plan of great importance evolved by the head of the company will 
succeed only through their help; many a one will fail because of 
their opposition. Never forget, either, that these men are the back- 
bone of the shop in labor troubles. They are the future foremen, 
and the development of the best ones amongst them is of prime 
importance. 

General Foremen's Meeting. 

A general "Foremen's Meeting" should be held once a month. 
In addition to the attendance of the foreman and assistant foremen, 
the presence of the members of the Factory Committee and of the 
superintendent should be required. Indeed, the presence of at 
least one of the higher officials of the company is advisable. 

At these meetings the heads of the several committees should 
touch upon the important problems before their particular committee 
requiring solution. Many points relating to progress of important 
work can be profitably discussed. Each man should invariably be 
required to make a statement as to the condition of his own depart- 
ment, a statement whether or not he or his department is responsible 
for any delays or trouble in any other departments, and a further 



THE COMMITTEE SYSTEM 33 

statement as to whether or not any other department is causing him 
or his department difficulty of any character. With the knowledge 
that they cannot deceive the well-informed committeemen before 
them, such a method of procedure soon develops many an interest- 
ing situation, and leads to the discovery of many a " Sticking Point." 
The discussion that naturally ensues soon leads to definite plans for 
the overcoming of these difficulties. 

A most profitable part of this meeting is a discussion of depart- 
mental records for the past month. These records can include such 
subjects as "Economies Effected," " Costs Reduced," "Suggestions 
for Improvement," "Production Records," "Departmental Ex- 
penses," and many others of an intensely practical and bene- 
ficial character. 

You may be sure that each and every foreman will strive to his 
uttermost to present a clean slate, a good record, if he knows that 
such departmental records will be openly discussed before his fellow 
foremen, the committeemen, the superintendent, and other officers 
of the company. I recall very forcibly my own animated and de- 
termined efforts to present a good record before such an audience, 
when I was the head of important divisions of work in several large 
manufacturing concerns. The existence of this spirit amongst the 
other heads of departments was also very evident. The average 
foreman can present to any one man his side of any story very 
skilfully. It is an entirely different matter, however, to tell the 
same story before a body such as I have described. It must be 
absolutely correct, or it will be instantly contradicted. 

In presenting matters before these bodies, very effective use can 
be made of folding blackboards. I continually use a type containing 
ten leaves, each leaf 36 by 28 inches. These fold together like a 
book. The entire set can be closed, and a lock placed on the cover. 
Their value is apparent. As our men often say, " nothing gets away 
from that blamed blackboard." An order from the executive to 
consider and bring through to success any certain plan is placed upon 



34 PROFIT-MAKING MANAGEMENT 

the board and certain portions of the work are assigned to different 
men, these assignments being noted upon the board. There each 
stays until it is accomplished. It has always been of much interest to 
me to note the effect upon the foremen. The thought that " that 
blackboard" contains these data, and that in four weeks it will 
appear staring them in the face, always worries them, and arouses 
their determination to accomplish the task so as to have it "rubbed 
off the slate." I receive reports right "from the blackboard" show- 
ing progress made or lack of it. The average manager needs no assur- 
ance as to the effectiveness of such a plan. It is a wonder worker. 

The Workmen. 

That this committee system has a good effect upon the workmen 
cannot be denied. They are undoubtedly affected by it. The posi- 
tion of job boss becomes a more attractive prize to strive for. They 
soon see, too, that under such a system unfair selections to such a 
position by the foremen become very rare, inasmuch as a foreman 
will seldom risk recommending a man to the Factory Committee 
for promotion on any basis other than that of merit. The danger 
of being caught is too great; and then again, the rivalry between 
departments becomes such that the foreman very soon learns that 
he cannot afford to take such action, because he thereby immediately 
affects the efficiency of his department. He soon learns that under 
such methods inefficiency becomes apparent at an astonishingly 
early date. 

I do not intend to deal at this point with a comprehensive plan 
for increasing the efficiency of the working force, for a thorough 
consideration of many other practical points, such as wage system, 
rate of pay, sanitary conditions, etc., is first necessary; but it is 
necessary to emphasize the fact that some such plan as that outlined is 
absolutely necessary as a foundation to work upon ; for you must give 
the worker "his chance" to advance in fair competition with others 
in order to develop his latent efficiency. 



THE COMMITTEE SYSTEM 35 

Again, such a system assures the company that any policy affect- 
ing its workmen, which it desires carried out, will be carried out. 
I have often seen the humanitarian, fair-minded policy of the man- 
ager of a business so mangled, twisted, and torn out of shape by 
superintendent, foremen, assistant foremen, and job bosses, that 
its original owner would never recognize it by the time it reached the 
men and began to affect their daily life. 

Such a system cannot be equalled as, first, a discoverer, and sec- 
ond, a developer, of the strong men in the organization. After 
all, success in any project is only a question "of the right man," 
first, last and all the time. Consider how enormous is the practical 
benefit! What a method for pushing improvements, for controlling 
production so as to meet dates, for reducing costs, and, last but by 
no means least, for inspiring the foremen, job bosses, and workmen 
to do their best, through their natural ambition, under a system that 
provides them with a chance to show their worth ! How they will 
grow and expand under such conditions ! The words esprit de corps, 
and "working for the good of the company," are no longer empty 
phrases, but are illustrative of a spirit of enthusiasm, of good fellow- 
ship, and of determination to do their level best, which constitutes 
the best asset the company has, and the greatest and strongest force 
that tends toward success. 



Chapter III. 

REPORTS; THEIR NECESSITY— AND THEIR USES. 

££ / ~T" v HE secrets of cheap production!" The secrets that every 
■*■ manufacturer ardently desires to discover; that every 
wide-awake maker of manufactured articles wants to adapt to his 
own business! 

The place of first importance in all the methods and processes 
that will be considered in this series must be given to the comprehen- 
sive Committee System which has been fully treated in the two pre- 
ceding chapters. While the consideration of ways and means of 
increasing output, lowering cost, and improving quality leads us 
through a discussion of the several lines of department activities of a 
well organized business, the underlying principles of the " Committee 
System of Management" will be constantly referred to, and the great 
effectiveness of this system will be constantly employed to help us 
in solving many an intricate problem of management, method, or 
processes. Knowing so well its tremendous benefits in the develop- 
ment and management of large industrial enterprises, I consider it 
the best, and, in fact, the only, foundation upon which to build a 
thorough plan for reviving a run-down concern, or for developing 
even a well organized business to its fullest power and possibilities 
of profit. 

The work of the committees as outlined will however be immensely 
expedited if material for their deliberations is ready in written form 
— if there is " something before the court" at once upon its assembly. 
The result of their consultation also should often be permanently 
recorded. And the data of progress throughout the factory must 
come in concise expression to the manager's desk. The necessity 

36 



FACTORY AND SALES REPORTS 37 

for comprehensive reports of varied character is, therefore, obvious. 
The exact character of these reports and the ground that should 
be covered therein is not always so obvious. In fact, seldom is 
there found a system of reports that is really comprehensive and 
logical. 

Any attempt to define a system of this character must be at first 
general in character because of the differing conditions in each 
business. I have, however, applied the fundamental ideas explained 
below to a number of lines, and have never yet failed to make a 
practical application of their meritorious features, although their 
form was greatly changed. 

In developing such a line of reports, let us begin by considering 
what we need in the way of methods to increase the working effi- 
ciency of the concern, and what will enable us to oversee and check 
up thoroughly both production and sales conditions. First, then, 
we want methods for determining what must be accomplished in the 
production division — in the character, regularity, and volume of 
output, in the cost of production, in the development of new ideas 
or inventions to conquer competition, in the steady development 
of greater efficiency and reduction of costs. Second, we want 
methods for determining what volume of business must be secured, 
and what profit must be obtained, on each and every class of goods 
manufactured, in each selling territory ; what expense can be allowed 
to pile up while the goods are being placed upon the market. Next, 
we need methods by which the selling organization can be forced to 
meet these requirements and bring the necessary results. 

In short, we must have plans and methods by which the manu- 
facturer can first get a clear conception of what should be accom- 
plished in each division of his business; and next, means by which 
he can get a firm grasp upon the details of his business so as to force 
the accomplishing of these longed-for results. 

In general outline the reports must be: — the "Monthly Analyzed 
Profit and Loss Sheet," the "Sales Reports," the "Factory Reports" 



38 PROFIT-MAKING MANAGEMENT 

and the "Cost Reports." All will be more fully outlined as the 
discussion develops, but the scope may be outlined as follows: — 

The Monthly Analyzed Profit and Loss Sheet. 

This report should show: — 

a. Delivered sales, with proper divisions for each class of goods 
produced, and receipts of other character. 

b. The factory cost of the goods in each division. 

c. The cost of delivery, including freight and cartages properly 
classified. 

d. The receipts and disbursements on all work of a character 
auxiliary to the main lines of production, such as repair departments, 
moving departments, etc. 

e. The selling expense, divided into proper classifications for 
analysis. 

f. The office and general expenses that can properly be charged 
against each selling branch or territory. 

g. The, division of general or executive expense of such nature 
that it cannot be charged directly against a branch. 

The importance of this report will be immediately recognized. 
It provides an analysis that enables any manager to locate immedi- 
ately the points of profit and the points of loss, provided the distribu- 
tion of credits and debits is correctly made. It is the primary report 
upon which the balance of the reports are founded. While it may 
appear complicated, the business man knows that it is necessary; 
and the one who fears its complication can be assured that it can be 
developed very easily by ordinary methods of accounting and the 
inauguration of comparatively simple systems in the factory. 

The Sales Reports. 

Coupled with the preceding report should be first, a comprehen- 
sive memorandum outlining in a simple manner the necessary work 
of the selling department, no matter how the goods are distributed 



FACTORY AND SALES REPORTS 39 

upon the market. This report should show what goods must be sold, 
at what profit they must be sold, and under what expense they must be 
sold, in order to secure the desired profit on the balance sheet at the end 
of the year. It is not a difficult matter for an intelligent man to take 
such a report as the outlined " Analyzed Profit and Loss" report, 
consider what profit his business should show, and calculate from this 
the profit he should expect from each branch of it in order to secure this 
profit, and under what expense it is possible to run in order that his 
gross profit from his sales may not be eaten up by selling and general 
expenses. A simple enough method of procedure, but one seldom 
taken. And often where this sensible calculation is made, little 
real scientific effort is made to "hew to the line," to insist upon 
reasonable profits, to hold down expenses and to conduct the busi- 
ness along the lines which such an analysis shows are absolutely 
necessary. 

The next report on sales needed is naturally the one showing the 
actual results, territory by territory; showing volume and profit 
secured and expense of getting the business. It is immediately 
apparent that a weekly (or in some concerns a daily) comparison of 
the actual sales results with the data showing the results that must be 
secured or — as I term it the "must data" — will prove invaluable. 

There are naturally a number of sales reports of a different char- 
acter from these two just outlined that should be secured from the 
selling end of the business, but they are amplifications of the main 
reports and will be touched upon later under the sales division. 

The Factory Reports. 

The discussion of factory reports will naturally follow the descrip- 
tion of the factory system and so cannot well be elaborated upon 
here. They should, however, naturally give the first importance to 
exhibiting progress upon contract, special and stock work, weekly; 
showing clearly the location of this work in the shop and the steps 
taken to get it out on time. The manufacturer who is constantly 



40 PROFIT-MAKING MANAGEMENT 

harassed by tardy deliveries and hampered by the lack of such data, 
can hardly realize the effective use that can be made of such weekly 
reports. The knowledge of exact conditions, coupled with the devis- 
ing of ways and means to overcome threatened delays, and constant 
pressure upon the factory, bring excellent results. 

The Cost Reports. 

Their extent will be determined by the character of the business. 
But, in general, fully analyzed cost figures sent to the chief execu- 
tives for their scrutiny, comparison, and criticism, bring admirable 
returns. Let one of the higher officers bring into a committee meet- 
ing, or a general foremen's meeting, a set of fully analyzed cost 
returns upon some particular line of the product, and begin to 
inquire of the different foremen present why their share of the 
expense amounts to "so large an amount," and there will usually 
follow a red-hot discussion that will throw many a valuable side 
light upon costs of production. 

Again, with accurate cost and stock data it is not difficult to 
secure monthly stock inventories at least approximately correct. 
Of course, a perpetual book inventory which enters into the general 
accounting of the company can be devised. I find, however, that 
not one manufacturer in ten is willing to spend the necessary money 
for this. However, he would rejoice over a monthly inventory, 
secured without shutting the shop down, which, coupled with his 
profit and loss statement and the data contained in his general 
books, would enable him practically to secure a balance sheet of the 
company's operation monthly. 

The other important reports upon output, departmental expenses 
and results, production methods, tool-room results, etc., will be 
treated later — likewise the strictly executive reports. Keep in mind, 
however, that these reports are so effective because of the committee 
system . They should wherever possible be made up by the committee 
handling the different branches of the product. And you may be 



FACTORY AND SALES REPORTS. 41 

sure that your committee, composed of enthusiastic men whose 
reputations are at stake, are going to see that progress reports, cost 
reports, output and production reports, represent the very best that 
they and the shop can accomplish, when they know that these will 
be closely scrutinized by the heads of the company. 



Chapter IV. 

THE DESIGNING AND DRAFTING DEPARTMENT. 

A FTER the establishment of the committee system and the 
-**- foundation of a fundamental scheme of reports, the next 
logical step in reorganization is the consideration of the designing 
and manufacturing system, methods, and processes — the considera- 
tion of the usual defects, and the determination of plans for remedy- 
ing them and introducing in their stead the most modern means 
for efficient, cheap, and accurate production. 

The Designing and Drafting Department. 

The secrets of cheap production lie first in the organization of the 
designing and drafting department, whether it be two men or one 
hundred, by methods that: — 

a. Will develop the possibilities in its working force in both gen- 
eral efficiency and accuracy in details ; 

b. Will ensure invariably a design on a new or a re-design on an 
old product that will bring out the best possibilities of manu- 
facture, both as to ease and cheapness of manufacturing, and 
the use of standard and stock parts ; 

c. Will bring about intelligent and sympathetic co-operation of 
this department and the shop, upon both design and methods ; 

d. Will result, through the mutual co-operation of designer, drafts- 
men, foremen and sales department, in a constant striving for 
new and better designs, a more thoroughly standardized prod- 
uct, and lines of manufacture better suited to the needs of the 
market and better fitted to outstrip the competitor. 

42 



THE DRAFTING ROOM 43 

In inseparable association with the designing and drafting depart- 
ment is the tool room, including the tool-designing department. 
Here indeed is the " heart of the shop." An ill managed, inefficient 
tool room invariably means a run-down shop. A well managed, up- 
to-date tool room, headed by a first-class, tactful mechanic, thor- 
oughly versed in the possibilities of modern methods, modern tools, 
modern steels and speeds, should always head the shop in the right 
direction and be the great factor in keeping it there if its power is 
recognized and properly guided and used. The general designing 
and drafting department and the tool room may be properly con- 
sidered the main levers by which to pry up slovenly and bad manu- 
facturing conditions, and the strongest factors in gaining the desired 
end of cheap and accurate production. The work of these two 
departments forms the initiative to modern shop success. 

The drafting department, however, does (or certainly should) 
originate the fundamental designs and plans and the accompanying 
details; yet its work is too often responsible for the "shop deviltry" 
that shortens the days of many a conscientious factory superin- 
tendent; it is the department which is seldom properly conducted, 
even in well developed concerns, and, in most average or run-down 
concerns, it is a "fright." 

The head of this department, one of critical importance, is often 
a man of limited shop experience, with little knowledge of methods 
of adapting design to economical methods of manufacture, no appre- 
ciation of the value of standardization or concern for the use of 
stock parts in designs, but plentifully supplied with the baneful 
"bump of importance" — the spirit of "know it all." His deter- 
mination to hold fast to his own ideas is equalled only by his ingeni- 
ous methods of covering up his mistakes, and an intense jealousy of 
anyone (especially a shop man) who can or does suggest any improve- 
ment in design or method. 

Requirements for an Efficient Department. — The first and the 
absolute requirement for an efficient designing and drafting depart- 



44 PROFIT-MAKING MANAGEMENT 

ment is an efficient man to manage and run it. No half-baked off- 
spring of a school nor " graduate" of your existing department will 
fill the bill. Both this department and the tool room call for men of 
a high type. The more capable, the better. Men in these positions, 
if properly handled, should prove to be worth any reasonable sum. 
This particular man, in addition to being a capable designer and 
draftsman, should possess a thorough knowledge of the best types of 
machine tools and the most modern machine methods. He should 
also have a good knowledge of foundry practice and pattern making. 
To this necessary knowledge, add tact and a willingness to listen to 
the shop foreman and to follow stock records in designing new or re- 
designing old work, and you would have an ideal combination ; one 
so rare, however, that I do not advise anyone waiting to secure a man 
with this desirable combination of qualities. You might have to 
wait too long. 

These pages will outline methods by which this necessary con- 
sideration of shop processes and shop knowledge of the foremen 
(invaluable as it is) will be fully developed and the valuable points 
incorporated in this man's work. Whatever his qualifications along 
the lines mentioned, however, he should invariably be progressive 
to the last degree — ambitious to a fault. His mind must be open 
enough to consider the needs of the market from the standpoint of 
the sales department and the progress of the competitor. He should 
be in much closer contact with the sales department than is generally 
considered necessary or even advisable. Indeed, the spirit between 
designer and sales manager is more often one of hostility than of 
co-operation. And yet " common horse sense" should teach us that 
this connection should be a close one. The day of hostility between 
the factory and selling organizations is passing. 

I have discussed at some length the requirements necessary for 
the head of this department because his importance is vital; and also 
because in most cases the man usually in this position falls far short 
of these requirements, and the firm thus fails to realize the possibili- 
ties of cheap production. 



THE DRAFTING ROOM 45 

In many cases I venture to predict that the special conditions of 
the case are such as to make it impossible to introduce a new man 
without danger of serious disruption of existing conditions. If 
such be the case, then introduce methods of organization and man- 
agement that will check errors, force co-operation between the draft- 
ing room and shop, lead to standardization of product, and provide 
the inspiration for new and better designs through other sources 
than an inefficient head. Often it is wise to introduce a new head 
into the department as a "new draftsman," to work "on 'the table" 
until he is thoroughly acquainted with conditions and can take hold 
of the department without danger of disturbance. 

The qualifications of the balance of the draftsmen will depend 
altogether upon special conditions in each case. I cannot pass 
consideration of them, however, without suggesting methods of 
training and advancement that will spur them on to do their best. 

Bi-weekly meetings will do much good, and when a draftsman is 
working upon a special design, meetings with the proper committee 
will benefit him and improve his work greatly. Encourage your 
draftsmen to absorb all the shop and foundry practice possible, and 
to mingle with the shop foremen constantly. Impress upon them 
the necessity of studying existing machinery and stock conditions. 

The general requirements for efficient work in this important 
department, in addition to those relating to the organization itself, 
just detailed, can be classified as follows: — 

1. — Comprehensive and businesslike co-operation should be estab- 
lished between the designing and drafting departments and the 
shop foremen. The objects are manifold. Great benefit will be 
derived from a free exchange of ideas and a free criticism of design 
by men qualified by shop experience and a knowledge of former 
mistakes. Assurance will be obtained that every design represents, 
in its last analysis, the combined knowledge, skill and experience 
of your best men, and the consequent assurance that when it is 
produced it will be properly proportioned for strength, will operate 



46 PROFIT-MAKING MANAGEMENT 

properly, and will be so designed as to be produced in the cheapest 
manner possible. Such conferences will also facilitate the proper 
routing of new work through the shop with reference to the existing 
conditions of stock output and machinery. 

This co-operation, further, will ensure a most thorough considera- 
tion of re-design of regular product— a question which is of paramount 
importance in considering the steps necessary in revivng a run-down 
concern. The general conditions surrounding the old line of produc- 
tion and the problem facing one in considering the general re-design- 
ing of this old line are often well-nigh appalling. But here you must 
start and here you must stay until a general line of procedure is 
mapped out and progress begun. And, watch that progress. See 
that it is made. Singularly enough (in view of its importance), 
there is usually a slackening of endeavor, a lessening of effort in the 
proper direction, after a full plan of this nature is mapped out and 
work begun. Every excuse of " overload of routine work," " unex- 
pected demands upon time due to unusual conditions," etc., is offered 
to explain why the necessary progress upon work of a critical nature 
is not diligently pursued. 

Progress every day, if only one new line upon the desired drawing, 
should be insisted upon, and no excuse for failure to accomplish 
this little should be accepted. One of the most irritating experiences 
of the conscientious factory manager is that lack of progress upon 
improvements that he knows are vital to the business. "Some 
progress every day" should be unflinchingly called for from those 
delegated to handle these questions. 

2. — Standardization is the second great line of advance to be 
pursued in the designing department. The entire designing and 
drafting force, from the head of the department down, should always 
keep in mind the great benefits to be derived from it. While this 
applies particularly to lines of product manufactured under special 
contracts and specifications, at the same time much of its advantage 
can be applied even to the production of a so-called standard article. 



THE DRAFTING ROOM 47 

In many cases standardization of a product is possible if the sales 
department can be forced into line and a conscientious attempt 
made to introduce a standard article on a market apparently 
requiring goods of special sizes and quality. 

The great advantage of this from every standpoint is of course 
apparent. It means cheapening production through duplication of 
parts and ease of handling; increase of output per square foot of 
floor area through quicker production, and the consequent reduction 
in indirect expense, per piece ; the possibility of building for stock in 
slack times and so keeping up the factory output; quicker deliveries 
and more orders, better satisfied customers, and a more rapid turn- 
ing over of working capital — this latter being something that the 
financial managers of the business will thoroughly appreciate and 
hail with joy. 

The use of stock parts is a profitable step toward standardization 
even where product in its entirety may not be reduced to standard. 
The entire drafting force should be provided with books containing 
full data upon the shop's standard small tools, such as reamers, 
dies, taps, etc. They should also be continually forced to consider 
methods of designing so as to use standard and stock parts already 
manufactured. 

3. — Designing so as to ensure cheap machining and assembling 
is a third prime requirement of drafting-room economy. The men 
should be continually impressed with the necessity of designing the 
parts so as to be easily and cheaply machined and assembled, and 
that, too, upon the types of machine tools already in the shop. The 
needs of the pattern maker and the possibilities of the foundry 
should never be forgotten. Nor should the tool room and its possi- 
bilities in the way of making inexpensive tools be overlooked. 

4. — The making and following of drawings should be insisted 
upon. The designing and drafting department should make all 
drawings of every character. Under no circumstances should any 
drawings be made by the shop foremen. The up-to-date shop man- 



48 PROFIT-MAKING MANAGEMENT 

ager will smile at the idea of this being done in this generation; yet 
I know of several large shops, and many small ones, where this rule 
is not being enforced, and the shop foremen (in some cases even the 
job bosses) make many of the detail drawings. In all cases, how- 
ever, the drawings should be 0. K.'d by the shop foremen, either in 
committee or individually, before they are placed in the shop. The 
great importance of this is at once apparent. Then, after the draw- 
ings are 0. K.'d and sent into the shop, they should be followed. No 
deviations should be permitted. If any change is found necessary, 
then this change should be approved by responsible parties, and 
made on the drawing. 

Reports from the Machine and Assembling Rooms. — Much good 
can be secured from a simple yet thorough system of reports by the 
foremen, based upon their actual experience in carrying through 
their departments a newly designed product, these reports to con- 
tain criticisms and suggestions upon design, and ease and cheapness 
of machining of parts. 

In my opinion, all these very desirable results mentioned in detail 
here can be secured only through the consultation and co-operation 
of a group of those men best qualified by experience to control and 
solve the important and intricate problems arising in the considera- 
tion of new design or re-design of an old product. I therefore 
strongly advise the submission of all these ideas to a committee 
formed of the head designer or draftsman, the head of the tool room, 
and the general factory committee made up of the factory manager, 
the important machine-room foremen, and the head cost man. This 
committee should be supplemented from time to time by the pres- 
ence of the foundryman, the pattern maker, and the stock man. 
With such a committee handling the questions outlined, the success 
of the plan is assured. 

In cases where the company is fortunate in having an efficient 
head designer, such a committee will prove a great spur, and of 
tremendous assistance to him and to the company. Where no 



THE DRAFTING ROOM 49 

efficient head exists, this committee will assume the important role of 
" originator of new ideas." Let the head of the company place in 
the hands of such a committee the general problem of the market 
requirements regarding a new product, or the necessity of re-design- 
ing an old product, from the standpoint of trade requirements as 
affecting either design or costs of production. 

The interest shown by such a group is immediate and intense. 
The result of their thought and work is invariably so far superior to 
the work of any one man as to admit of no comparison. Supported 
by such a system, the work coming from the department will be 
scientifically designed, correct, with every part mechanically strong, 
and capable of being produced in the cheapest manner possible. 
The entire design will represent the best ideas of your best men, and 
every man through his participation in the particular product will 
be so interested as to do his level best to make a success of it. 

The experienced shop manager has only to consider the usual 
maddening program of errors in data, mistakes of design, faulty 
judgment regarding economy of manufacture, lack of standardiza- 
tion of parts, and last, but by no means least, the covert hostility of 
the shop man to the new productions of "that blamed drafting 
department," to realize the possibilities which lie in developing 
methods which will ensure accuracy, economy, standardization, and 
the interest of the machine foremen in the successful and economical 
production of any particular design. 



Chapter V. 
THE TOOL ROOM— THE HEART OF THE SHOP. 

TN the preceding chapter I advanced the proposition that the 
essential preliminary step in the reviving of a run-down con- 
cern is the thorough reorganization of the designing, drafting, and 
tool rooms, along rather new lines. The necessary conditions to 
be secured in the first two departments were fully dealt with and 
the functions which the tool room should exercise toward the manu- 
facturing processes at large were outlined. 

In order, however, that the tool room, by its organization and 
equipment, may be enabled to lead the shop toward the goal of 
manufacturing success, it must itself be instituted for the highest 
efficiency and economy in the production of tools. I feel that too 
much emphasis can not be put upon the conception that this is the 
place to begin the work of reform, by close examination of the exist- 
ing conditions and rectification of existing defects. It remains, then, 
to show how the maximum possibilities of the tool room may be 
realized. My suggestions are the result of experience in a number 
of very trying cases of factory inefficiency, and the remarkable 
results coming from the adoption of the plans described fully justifies 
strenuous insistence upon the statement that this is the real starting 
point for the campaign of physical improvement. 

The Tool Room. 

The tool room, as already mentioned, has been aptly called " the 
heart of the shop." It is the most important department in any 
shop, if its full functions are developed aright. If the designing and 
drafting department is weak, the wide-awake shop manager can 

50 



THE TOOL ROOM 51 

supply the defects through other sources, if necessary; but if the tool 
room is in an inefficient condition, the whole shop will invariably 
be in correspondingly bad shape. A well organized and well equipped 
tool room, even though it be a very small one, in charge of a pro- 
gressive, wide-awake, thoroughly experienced man who is willing 
to co-operate with the balance of the shop, is essential in the reviving 
of a run-down concern or the improvement of one not "up to the 
proper mark of efficiency." It is always interesting, when inspect- 
ing a shop that is in bad shape, to visit the tool room and note how 
closely the entire shop conditions conform to the tool-room condi- 
tions. At times a good machine-room foreman will build up an 
efficient department despite a badly managed tool room ; but this is 
rarely the case, owing to the severe handicap of poor maintenance 
of machine tools, defective design of cutting tools, and the impossi- 
bility of securing any accurate, first-class milling fixtures, drill jigs, 
form cutters, etc., designed to produce the machine work more 
economically. 

It is not my intention to treat here the questions of tool-room 
equipment and methods of operating a tool-supply room ; for these 
questions have been fully discussed frequently, especially in a series 
of articles that have appeared in The Engineering Magazine.* 
The needs of different shops differ, although the equipment of lathes, 
milling machines, universal milling machines, grinding machines 
and one or more planers is common to all tool rooms. 

A number of systems for tool supply-rooms have been described, 
so that little need be said on this subject, except to insist upon 
having some accurate method of caring for small tools, keeping them 
in good condition, and checking up the workmen relative to those 
tools in their possession. Some simple system of checking up the 
men when returning old or broken tools should assuredly be kept. 
The item of broken tools can become a very large one if the workmen 

* See especially the articles by John Ashford, July and August, 1904, and by R. 
Emerson, Dec, 1904 and Feb., 1905. Ed. 



52 PROFIT-MAKING MANAGEMENT 

learn that little or no attention is paid to their record in this matter. 
A simple report showing breakages and the parties responsible for 
them will enable the shop manager to locate his careless workmen. 

My main object at this time, however, is to bring out clearly the 
tool room and its functions as factors in the development of a shop 
toward a high standard of efficiency, particularly when its initial 
state of efficiency is low ; to show how this department can prove its 
value in making possible the determination of proper standards of 
production rates, the devising of vital data for a proper wage sys- 
tem, the introduction of economies which the cost system shows are 
possible, and the lowering of production costs through efficient main- 
tenance of machine tools and the building of new tools especially 
designed for the particular product manufactured. 

The determination of proper standards of production rates is a 
subject which will be treated fully in a later chapter. Its great 
importance is obvious. The possible output of the shop, the lowest 
possible cost of production, the determination of wage-system stand- 
ards (in itself a subject of great importance), all depend upon the 
accurate determination of the lowest possible time in which each 
piece of work can be completed. The method of keeping the indi- 
vidual workman and the shop keyed up to that rate is an entirely 
different subject, to be discussed later. But the initial determina- 
tion of this possible speed of production is vital. The necessary 
tests are by no means simple matters. They involve accurate knowl- 
edge of the best results possible from the high-speed cutting tool 
steel, the proper shape and size of cutting tool, a knowledge of the 
character of the steel worked upon, and of the greatest capacity 
of the machine tool used, without too great an expense for mainte- 
nance and depreciation. 

Tool-Room Methods. 

The conditions surrounding tool-room work often make it diffi- 
cult to apply the same methods towards the hastening and cheapen- 



THE TOOL ROOM 53 

ing of production therein which might be applied to the production 
departments. Day pay is the usual rule. Owing to the character of 
the work, any other wage system is generally impracticable, and 
even if practicable would be inadvisable because of the necessity 
for accuracy. 

Nevertheless, even granting the difficulties that beset one in try- 
ing to apply the principles of cheap production to this chief agent of 
progress and economy, the tool room itself — still, so high is the 
expense per man when compared with that prevailing in the balance 
of the shop, so costly may the tool-room product run, of so great im- 
portance is rapid production, and last, but by no means least, so many 
are the opportunities for "laying down on the job" without the possi- 
bility of detection of any such costly tendencies — that some compre- 
hensive plans must be adopted, first, to ensure the cheapest possible 
methods of production, and, second, to check up foremen and work- 
men properly as regards costs and accuracy. If these points are 
properly covered, the rate of production will care for itself. Such a 
policy is especially necessary in the care of the run-down concern 
with an inefficient or " slow-gaited" tool-room force, whether the 
tool-room force is a large or small one. For, to state an important 
point which I shall want to emphasize, we must always keep in 
mind not only the possibility of wasted money through excessive 
tool costs, but also, and indeed especially, the waste of valuable 
time in securing tools by the use of which large sums can be saved in 
the shop. 

We must, of course, assume that the tool room is supplied with 
a full equipment of high-grade machine tools. 

First get a first-class, high-grade tool-room foreman. This can- 
not be emphasized too strongly. Do not plan a campaign of im- 
provement with any expectation of a satisfactory outcome unless this 
first step is taken. Well paid, high-grade mechanics are, in the 
end, the cheapest labor for the tool room. The mistakes of the low- 
wage workman are too costly. Owing to the high hourly rate of the 



54 PROFIT-MAKING MANAGEMENT 

tool maker, thorough organization in the tool room is necessary in 
the interest of low costs and rapid production of the tools them- 
selves ; but beyond this, is the great importance of getting the new 
tools into service. Delays are doubly costly, as already pointed out; 
and yet unless the tool room is well organized and systematized, it is 
often more productive of "unaccountable delays and disappointed 
hopes" than of the new and much needed tools. The dilatory 
movement of the ordinary tool room constitutes one of the most try- 
ing experiences of the factory manager. 

In the older types of shop, even where large forces of tool makers 
are employed, the practice of allowing the expert high-priced work- 
man to machine up and fit all the component parts of a single tool 
and then assemble it into the finished product still prevails. Under 
such conditions, this high-priced tool maker will be found machining 
up jig bushings, legs, special screws, and other parts of special tools 
that can be easily standardized, and in many cases will be turning 
out in small quantities work that should be handled on stock orders 
and turned out in large quantities by much cheaper labor at a frac- 
tion of the cost. 

The similarity between this method of building tools and the old- 
time methods of building the finished machine for the market is 
striking. But just as the old-time method of construction in the 
case of the finished article was found too slow and costly for modern 
conditions of trade and competition, and has been rapidly supplanted 
by comprehensive plans for standardization, duplication, produc- 
tion in quantities and careful supervision of labor, just so the old- 
time tool-room methods are being changed so as to take advantage of 
these obviously economical steps in the building of costly tools. 

Standardization. — A tool-room force working under the old-time 
methods just described will produce in the course of a year sets of 
tools that are distinguished chiefly by a great lack of uniformity and 
absence of any attempt at standardization. Yet a close study of the 
ordinary shop tool conditions and requirements will prove that the 



THE TOOL ROOM 55 

standardization of many parts is possible if only a thorough-going 
attempt is made to effect it. This applies particularly to those shops 
where the tools are of the smaller sizes. For example, in the case of 
drill jigs, such parts as bushings, legs, stops, screws, pins — and even 
the bar stock — can be standardized to a comparatively few sizes. 

Duplication. — Once this is done the duplication of these parts in 
quantities and the keeping of them in the stock bins for immediate use 
becomes possible. The savings are at once apparent. First, a large 
reduction in the initial cost results because of. this production in quan- 
tities, and that too by a much lower priced workman than the tool 
maker. Again, the possibility of always having these parts on hand 
when wanted by this tool maker will invariably result in a large saving 
in both first cost and time. 

Subdivision of Labor. — The modern practice tends therefore 
toward the same rigid subdivision of labor in the tool room that exists 
in the production department. The high-priced tool maker does no 
work that can be performed by cheaper men. Not only are those parts 
that can be standardized and machined in quantities produced by a 
less expensive class of labor, but also much of the closer work in 
milling, turning, grinding, etc., is often handled by special men who 
do no other classes of work. Thus the tool maker, instead of labori- 
ously producing each and every part of any tool at great cost and loss 
of valuable time, becomes an expert adjuster and assembler, receiv- 
ing promptly from various sources many portions of the tool he is to 
finish, these parts requiring simply the finishing operations at his 
skilled hands to bring them "to size." 

In one large shop under my management, where conditions were 
unfavorable, we applied these rules of subdivision of labor and 
standardization to great advantage, especially in the building of 
large numbers of small drill jigs. The screws were standardized. 
All stops, legs and other small parts were turned out in large quanti- 
ties on the automatics. The bushings, also manufactured in large 
quantities, were turned into stock in such condition as to require 



56 PEOFIT-MAKING MANAGEMENT 

simply the finishing operations by the experienced tool maker. 
Even the bar steel forming the top, bottom, and sides of the jigs, 
was finished to standard dimensions, cut off to standard lengths, 
and placed in stock for immediate use. The tool-designing depart- 
ment followed closely this scheme of standardization, the result 
being a large saving in tool costs, even though at times slightly 
more metal was used in the jig than was required by either the part 
to be manufactured or the character of the operation. This extra 
cost was saved many times over in the lower wage cost, due to the 
fact that the high-priced man had only a few finishing operations 
upon the component parts of the tool, and thus became an assembler 
and adjuster to a large extent. 

In addition to this pleasing reduction in cost, there ensued a still 
more satisfactory increase in the output of greatly needed tools from 
a department handicapped by lack of room and of high-grade tool 
makers. 

The Small Shop. 

In the case of the small tool room of very few men such subdivision 
of work is often impracticable. But even in a department composed 
of four or five men, common horse-sense methods applied strictly 
to their work will result in a saving in both money and time that is 
of great importance and fully proportionate to the savings in the 
large departments. In shops where the tool-room force is a small 
one there usually exists a tendency to ignore this part of the organi- 
zation and let it get along as best it can. This is a vital mistake. 
In the first place, the tool-room force is seldom half large enough con- 
sidering the great value of its work. Again, the relative importance 
of this department in the case of the small plant is fully as great 
as in the case of the large company. Its work bears the same rela- 
tion to cost, accuracy, and quickness of production in one case as in 
the other. Whether the department be small or large, the same 
methods of organization, division of labor, and checking up of tool 
costs can be used to great advantage. 



THE TOOL ROOM 57 

Speeding up Tool Production and Checking the Cost. 

Lost time in the tool room, as already pointed out and emphasized 
is a more serious matter than in any other department in the shop, 
since delay in the production of a tool means not only a high rate of 
increase in actual cost of that tool, but may often involve a con- 
tinuation of a shop loss which could be avoided were the tool in use — 
a loss often many times the cost of the tool itself. 

The importance of adopting up-to-date methods for increasing 
tool-room production and for checking up and lowering costs then 
seems obvious. And yet the lack of effort to accomplish these 
results in most well run modern shops (to say nothing of the poorly 
managed) is as singular as it is prevalent. The belief seems to pre- 
vail that the cost of a tool is too difficult a matter either to estimate 
or investigate. And yet the admission of the fact that it is a diffi- 
cult question to solve makes the possibilities of loss in many direc- 
tions the more apparent, the need for some method of removing them 
the more pressing. 

The peculiar conditions make the problem a hard one. The work 
is usually altogether special and must be done upon the day-work 
basis of pay. The difficulty of securing proper economical results 
from this day-work system often leads to lax methods in administra- 
tion and management. The amount of time wasted by workmen 
under the day-rate system, unless they are rigidly supervised, is 
astonishing. Only an approximation to a " few days work" is often 
secured with difficulty. Even rigid supervision avails but little 
unless it is supplemented by some system that will prove a spur to 
the men — some system through the use of which the good men may 
feel that there is an opportunity for recognition and reward, and 
laggards may know equally well that if they do fail to produce work 
in a reasonable length of time they will surely be noted for punish- 
ment. 



58 profit-making management 

Tool Cost Card. 

The tool-room system advocated here depends upon the deter- 
mination (by estimate) of the proper tool-room costs, item by item, 
operation by operation, before work begins upon the tool; and then, 
after the tool is completed, the comparison of the actual with the esti- 
mated costs, and especially the noting of the records of the rapid and 
the slow workmen as shown upon the cards. 

The card on the following page is self-explanatory. 

Form of Card. — The form given is merely suggestive. In some cases, 
the division of "operations" is unnecessary. In other cases, they are 
important. In most cases, the total time in which the work is actually 
done can be placed upon the card after the operation is completed ; 
inasmuch as the man has before his eyes a statement of what should 
be done, he will know what he is accomplishing in the way of speed of 
production and he is certain that his record, be it good or bad, will 
"go up to the front office." Immediate and insistent inquiries as to 
causes and reasons for delay, when these occur, should invariably be 
made. Substantial benefits may be derived by offering to the men 
fair bonuses in case they secure a clean record of work done within 
the estimated time in the course of the week. This offering of bonuses 
removes the idea of "driving" which is so distasteful to many work- 
men. 

Such a system, simple to the last degree, still is remarkably 
effective. Indeed, it is so effective because it contains, in simple 
form, the fundamental principles underlying all progressive methods 
of increasing shop efficiency, namely: — 

1. — Determination of time in which work shoidd be done. 

2. — Placing it before the workmen themselves in definite form. 

3. — Holding before them the chance for rewards in bonuses and 
promotion for record work, and the fear of reprimand or discharge 
in case of failure through carelessness, negligence, or laziness. 



THE TOOL ROOM 



59 



Tool No. 



Tool Record Card 
Drawing Nos. 



Name of Part. 



Name of 

Part 
of Tool 



Operations 



Estimated 
Costs 



Actual 
Costs 



Name of 
Workman 



Remarks 



Total Costs Labor 



" Material 
Complete Cost 



This Tool must be completed by 

Date of Completion 

If any delay, Why? 
Special Instructions 
Design and Estimated Cost Approved by 

Tool passed by Committee 

Sig. of Sec'y 



SUGGESTED FORM FOR TOOL COST AND RECORD CARD. 



60 PROFIT-MAKING MANAGEMENT 

The Tool-Room Committee. 

The question that immediately arises will be "Who sets the esti- 
mated time for the work and who checks up the actual time re- 
quired?" I answer "The committee, as described in the preceding 
chapters of this book." 

While the work of this committee will be varied, its functions 
many, still they will always relate to the one main object so ardently 
sought for — cheaper production costs. 

Its members are vitally interested in the original cost of the tools 
and the rapidity with which they can be gotten through the tool 
room. These members are usually better qualified to estimate the 
length of time that should be required to build a tool of any descrip- 
tion than any one man or group of men. After a short experience in 
estimating and checking up costs, they will soon become sufficiently 
expert to answer the purpose. 

Method of Procedure. — After due consideration has been given to 
the tool model and the design of the tool itself, the estimate of cost of 
the tool should be determined and the record placed upon cards as 
noted. These cards should always be issued from and by this com- 
mittee, so as to have the proper effect upon the workman. The card 
should travel with the work so that the workman may have a constant 
reminder beside him as to the time in which this body of men expect 
the work to be completed — a constant reminder that any failure to live 
up to the estimate will be surely noted upon this card and an explana- 
tion required — that his failure makes an indelible record against him 
which will infallibly be seen by those in charge of the shop and com- 
mented upon to his disadvantage — that a poor excuse for his failure 
will only blacken his record still further — that, on the other hand, 
any betterment of the estimated record will be noted with satisfac- 
tion by these same men and will surely redound to his credit. A 
first-class honest workman will be pleased at the opportunity afforded 
him of placing an evidence of his superior ability upon records which 
are lasting and which are noted by those high in authority with a 



THE TOOL ROOM 61 

view to future promotions. The loafer and sluggard will soon be 
detected and can be sought out for improvement or discharge. 

Owing to the fundamental importance of the work of this com- 
mittee and the fact that upon it hangs most of the burden of bring- 
ing the shop to a condition of high efficiency, a short resume of its 
functions, mentioned briefly in Chapter IV, may well be brought 
out at this point. 
An outline of its province would be somewhat as follows: — 
1. — Planning new designs of product to meet new market con- 
ditions in such a manner as to ensure: — 

a. Proper construction and accuracy of operation. 

b. A course of manufacture that will result in the lowest possible 

cost of production. 

2. — Planning the re-design of an old product in the interest of 
economy of production. 

3. — Devising and considering plans whereby the shop production 
efficiency may be raised to a high point. 

This involves: — 

a. A close consideration of cost data so that the problem can be 

attacked at its most critical point. 

b. The devising of full sets of special tools so as to make possible 

the attainment of the desired end of lower manufacturing cost. 

c. The thorough consideration of these tools from the standpoint 

of design and low production cost. 
cl. Investigation of existing manufacturing conditions in the shop, 
and the careful planning of methods through which a high 
state of manufacturing efficiency may be reached. This itself 
involves a thorough knowledge of the types of machine tools 
best adapted to the work, and the best results that can be 
obtained from them through the use of modern high-speed 
steel for the cutting tools — a big subject in itself concerning 
which there is still a lack of definite data. 



62 PROFIT-MAKING MANAGEMENT 

e. The determination of "standard time" (or the time in which 
each job of work should be done) on each job in the shop by 
calculation and test. This work is of an importance that can 
aptly be termed critical. It is perhaps the most important 
work of the committee. As I will explain in detail later, I 
do not consider that the committee itself should attend to the 
tests and the determination of the standard times, but the 
head of the tool room should actively direct the work under 
the strict supervision of this committee. The work, espe- 
cially at its inception, should be constantly considered by this 
body in order to ensure proper results. 
Tool-Room Committee Membership. — In ninety-nine cases out 
of a hundred, the head of the tool room, supplemented by one or 
two of the best machine-room foremen and the head cost man, 
form the best group for undertaking this highly important work. 
Full reports of comprehensive tests made to determine the best 
production possible from each machine must be made the basis for 
one line of shop rejuvenation. The investigation of machine- 
shop processes and methods can best be made by such a group. 
The result of such action will invariably be as surprising as it is 
profitable. 

The designing of new tools holds great possibilities for economy 
or waste. Of course, the simple designing and building of new tools 
in a haphazard manner can be left to the head of the tool depart- 
ment and his tool designer; but only "haphazard results" can be 
expected. The results attained from this general method will often 
prove futile, for the head of the department is seldom in a position to 
determine by himself the most important problems to attack. I 
have seen the results of many weeks' work in the tool room thrown 
away almost immediately after the completion of a new set of tools, 
because of some change in method and design that upon examina- 
tion proved profitable. 



THE TOOL ROOM 63 

The work of laying out a thorough, consistent, and profitable 
line of work for the tool room requires judgment of the highest 
quality. If the original designing or re-designing of the product 
deserve the attention of the best qualified men in the organization, 
formed into a committee, then certainly this even more important 
and vital work should receive like consideration. In fact, considera- 
tion of the design of a new or old product, and consideration of the 
tools necessary to build the component parts of this same product, 
go hand in hand. 

I therefore urge the serious consideration of the tool problems 
by the committee formed of the head of the tool room, the head 
designer, the members of the factory committee, the head of the 
cost department, and any other of the machine-room foremen in 
whose departments the work is to be performed. 

Keep in mind that the most important — the really vital — " secrets 
of cheap production," can be solved only by the work of these two 
departments, and particularly of the tool room. 

If your shop is not producing as much as it should, or the costs of 
production are too high, then start a campaign of rejuvenation. But 
start it through the designing department and the tool room, whether 
these departments number hundreds of men or but five. Map out a 
logical and systematic plan of improvement, working through these 
departments, calling to your aid also the active heads of those depart- 
ments who meet and conquer the difficulties of manufacture daily, 
and whose suggestions and aid will prove of peculiar value. 

You can thus be assured of a product designed along lines that 
are practical, accurate, and that meet the requirements for eco- 
nomical manufacture. Coupled with this, you will secure from the 
work of the tool room and its committee data relative to possibili- 
ties of speed of production that are vital, plans for new systems of 
manufacture that are often radical, and as profitable as they are 
radical, and plans for new systems of tools that will often revolu- 
tionize individual processes and bring about great reductions in cost. 



Chapter VI. 
MINIMIZING THE TIME OF MACHINE-TOOL OPERATIONS. 

TWO fundamental principles of cheap production lie hidden 
away amongst inefficient shop processes, bewildering dis- 
order of shop conditions, and lax, inaccurate, and utterly mis- 
leading shop methods. They are of the greatest importance, and 
yet nine times out of ten a searching investigation will prove that 
little consideration has been given them in ordinary shop practice. 
They are so closely related that their simultaneous discussion is 
advisable. They are both essentially " time savers." These two 
principles are: 

1. — The determination of " standard time" for each job and its 
tabulation, introduction, and enforcement. 

2. — The absolute elimination from the workman's routine of 
every duty but that of running his machine continuously and 
efficiently; the bringing to him of tools and stock for his next job 
before he is ready for it. 

The first and possibly the more vital of the two is the determina- 
tion of standard time upon each job — that is, the shortest space of 
time in which each job should be completed (including setting up), 
under normal conditions and with due regard to the fullest possibili- 
ties and capacity of the machine tool, the cutting tool, and the stock. 

An appalling undertaking, this, in most shops, under existing 
conditions; appalling and seemingly impossible because of lack of 
knowledge of the best shapes for cutting tools, of the best methods 
of hardening and grinding, of the results to be secured from the use 
of high-speed steel cutting tools, of the best methods that can and 
should be adopted by a skilled workman, of the capacity of the 

64 



MINIMIZING OPERATION COSTS 65 

machine tools in the shop, and, worst of all, because of the lack of 
men skilled in the best methods for handling these cutting tools — 
men capable of doing the work and of seeing that the workmen do it. 

It scarcely seems necessary to argue in favor of this determination 
of standard time; and yet many manufacturers seem to prefer to 
leave the question of the rapidity of production to the foreman's 
judgment and skill alone. Their confidence, while perhaps amiable, 
is usually misplaced. No man with real shop experience will assert 
that the average foreman does, or in fact can, know the best results 
that can be secured in machining today, unless he has been afforded 
and has accepted exceptional opportunities for making thorough tests 
of a really scientific character — something that rarely happens. Even 
should a foreman possess this desirable knowledge, it is beyond the 
power of any one man to supervise properly any group of men, even 
though small, so that the high point of efficiency may be assuredly 
reached, and at the same time do the other work that usually falls to 
the foreman's lot. 

Again, the use of high-speed steel for cutting tools is a develop- 
ment of recent years. Notwithstanding all that has been published 
on this subject, comparatively few shop foremen really know what the 
fullest possibilities of its use are, and fewer still ever force their depart- 
ments to use it to its fullest efficiency even after its value has been 
recognized. In fact, there have been comparatively few tables ever 
published that show in a practical manner just what can be done with 
it. The machine-tool builders themselves, singularly enough, seem 
to be unable to give any positive, accurate advice as to the actual con- 
ditions of cutting speeds, feeds, and depth of cut under which their 
own tools can best operate, and even the makers of the tool steels do 
not provide tables of much practical use. 

Nevertheless the work of such a man as F. W. Taylor, in his 
remarkably thorough and extremely valuable publication, "The Art 
of Cutting Metals," clearly shows the possibilities that lie in the use 
of these modern cutting tools — Messrs. Taylor and White being the 



66 PROFIT-MAKING MANAGEMENT 

discoverers of these possibilities and Mr. Taylor himself leading the 
van in the application to practical use of these principles. This one 
work makes clear not only the great possibilities but also the great 
difficulties that originally lay in the path of the investigator. With 
all of these points in mind, it is simply "rot" to give heed for a 
moment to any claim of any shop man that his knowledge of this sub- 
ject is at all exhaustive. 

Standard times should be determined by some one, some how. 
Certainly no one can dispute the fact. Experiments and experience 
show that the good old plan, "depending on the foreman" for this 
determination, as mentioned above, gives results 40 to 60 per cent 
short of maximum efficiency. Inasmuch as your entire business is 
built upon and depends upon the cost of production — or, in its last 
analysis, simply "the time it takes each man to do his job of work," 
it is of fundamental importance that that standard time be first deter- 
mined by methods that will ensure accuracy. 

The second cardinal principle of cheap production stated at the 
outset was " the absolute elimination from the workman's routine of 
every duty but that of running his machine continuously and effi- 
ciently; the bringing to him of tools and stock for his next job before 
he is ready for it.' 7 

The machine hand, assembler, or other worker must be forced 
to concentrate his skill and attention upon his own work and that 
work alone, making it impossible for him to waste his time (and thus 
the employer's money) upon work he should not do. Consider for a 
moment the many things that a machine hand, for example, will 
ordinarily do other than operate his particular tool, and then give a 
moment's thought to analyzing the result. The worst "time wasters" 
can be classified somewhat as follows: 

a. Running to the supply room for stock for a new job. Result, 

the machine tool is shut down. 

b. Getting tools, clamps, etc., from the tool room for a new job. 

Result, the machine tool is shut down. 



MINIMIZING OPERATION COSTS 67 

c. Grinding his own tools (and very badly at that). Result, the 

machine is shut down. 

d. Excessive time in "setting up" a job, due to lack of proper 

instruction, or to a tendency to "soldier" because of lack 
of supervision. Result, the machine is shut down. 

e. To these add the further tremendous loss of output because 

the workman fails to use the proper — the very best — cutting 
speeds, feeds, and depth of cuts, through either lack of knowl- 
edge or lack of supervision, and you have a combination 
that cuts the output of the ordinary shop far below what it 
should be. 
If your shop is running under ordinary foremanship supervision, 
with no thorough method for bringing to the workman his stock ; for 
providing him with tools for the next job before he is ready for it; 
with no method of instructing him what to do and how to do it, and 
no thorough way of comparing his output with what it should be 
according to the best standards of today, (mark me! not your fore- 
man's standards) — then you can make up your mind that your output 
is far too low according to the best standards of production. 

You may imagine that "carefully calculated" piece-work rates 
will protect you ; but if your piece-work rates have to allow for the 
conditions stated just above, you are deceiving yourself grossly as to 
the possibilities of your output. 

The important consideration is time! time! Time of the work- 
man running his tool — that is the vital point. Every minute counts 
for profit if this tool is operating continuously and efficiently; for 
loss if it operates under the nullifying influences detailed above. 

Consider for a moment! Your entire factory investment — build- 
ing, power plant, transmission plant, all probably built and selected 
with great care and expenditure of money — is simply to care for 
and operate the separate units of machine tools, or to house properly 
your assembling spaces. Your investment in machine tools repre- 
sents large sums. This vast expenditure is made with but one object 



68 PROFIT-MAKING MANAGEMENT 

in view — that of producing work and producing it as cheaply as pos- 
sible. Calculate accurately your indirect charges of every character; 
proportion the total against each machine tool according to the 
"machine-rate" method of apportionment, and note carefully how 
large must be the rate per hour for each machine. This will be found 
to be an astonishingly large proportion of the labor rate per hour and 
will prove a good index of the great cost of lost time in the shop. 

Is it not clear, then, that each machine tool should be, nay must 
be, brought to as high a factor of operating efficiency as possible? 
Is not your entire investment made with that one end in view? Does 
it pay to have the efficiency of any collection of these units reduced 15 
per cent to 25 per cent by the existence of such shop methods as those 
detailed, by which the men operating the machines are actually com- 
pelled to shut them down to hunt up their next job, to collect their 
tools, to grind their tools, and to do many things that should be clone 
for them? Can you afford to suffer an even heavier reduction in effi- 
ciency due to lack of knowledge of the " best time for each job?" 

The importance of these points can be further emphasized by con- 
sidering that all such delays, which in their total represent a large 
amount, directly affect cost and profits, output, indirect expense of 
every description, quick movement of stock, and hence ultimately the 
amount of working capital needed in the business, and the possi- 
bilities of quicker deliveries, with a resultant direct effect upon the 
sales department and customers. Indeed, aside from the question of 
costs and profits, nothing is more important to the separate mem- 
bers of a company — from the executives with their financial problems, 
through the sales department with their selling problems, to the 
harassed factory manager — than the quick movement of stock. 

The reason for the continual absorption of working capital into 
machinery or stock that worries many a financial officer, or for 
deliveries so delayed as to affect seriously the efficiency of the selling 
organization, or for excessive and unreasonable and possibly unex- 
pected costs that seem and, in fact, are out of reason — the reason for 



MINIMIZING OPERATION COSTS 69 

all lies hidden away back in the shop processes and methods. It crops 
out at the individual lathe, planer, shaper or assembling bench, and 
then only to the keen experienced eye. The workmen busy? Surely. 
Look at them hustling ! But — see that group around the tool-supply 
window waiting for tools? How many are waiting at the tool grind- 
ers to grind their own tools each in his own "individual" manner? 
There is a mechanic who has taken twenty minutes to " set up" his job 
instead of ten. Then pause and wonder how in the world any one or 
two or more foremen can be sure that the men now operating the 
machines are using proper speeds and feeds and getting the most out 
of the machine and the tool. 

In fact, the causes for all these serious troubles are located so far 
back toward the fundamentals of production — the individual units 
affording the causes are so seemingly unimportant, and such is the 
difficulty of recognizing these conditions, buried as they are in a busy 
shop — that they are overlooked or ignored. 

As a general proposition, the greater the difficulty of solving such 
problems the more important and necessary becomes that solution, 
simply for the reason that in this you are dealing with humane ele- 
ments to whom is given the opportunity of slowing up in production 
solely because of that very difficulty that lies within the problem 
itself and its solution. And yet so fundamental and vital is their 
importance that they cannot be ignored. 

The Starting Point for Minimizing Operation Costs. 

Investigation of Existing Machinery. — Any plan for the intro- 
duction of proper methods for the determination of standard time and 
the elimination of wasted time must begin by an investigation of the 
existing shop machinery — an individual report upon each machine 
tool, especially touching upon the defects, and a recommendation as 
to what types should be purchased in the future to meet modern pro- 
duction requirements. This is a matter of great importance, but 
machinery, designed to stand up under the latest high-production 



70 PROFIT-MAKING MANAGEMENT 

requirements, are recognized and listed up at the beginning of the 
introduction of any new plans, this important matter is liable to be 
lost sight of later, with the consequence that when the time for pur- 
chases of new machinery does come, the older inefficient types are 
clung to and the shop is further encumbered with old-style tools. 

Nor is the question of securing a more rigid and efficient tool such 
a simple question as at first appears. Few machine-tool manufac- 
turers are making an earnest attempt to place upon the market tools 
strong enough to meet the more severe requirements of today. Why? 
First, because comparatively few have made tests of sufficient scien- 
tific worth to determine where the points of greatest weakness really 
are and how to strengthen them properly. Second — there is the 
money tied up in old patterns, old stock in the factory bins, in ma- 
chines going through the process of manufacturing, and finally in 
finished machine tools carried in the sales rooms. Changes of a radi- 
cal character would prove a serious matter under such conditions. 
And, again, the demand of the manufacturer for better and heavier 
tools has not been urgent enough to force the machine-tool builder 
into the tremendous trouble that a thorough redesigning of the older 
types would surely cause. Therefore the latest product of a machine- 
tool manufacturer is not necessarily adapted to the methods of pro- 
duction that I am advocating. 

Greater driving power is usually the first requirement. Accurate 
tests have shown that modern lathes, for instance, should have fully 
double the driving power usually contemplated in their design. This 
is a point that must be considered carefully. Of course a proper 
increase in driving power of a lathe, for example, means wider cones, 
heavier bearings, and stronger heads. Immediately there follows the 
question of the rigidity of the bed. It is at once apparent that this 
is a very important point, and yet too little attention has been paid to 
the design of bed best suited for withstanding the strains and stresses 
due to the use of new high-speed cutting tools. Solidity is very nec- 
essary. The consideration of the need of strength and rigidity should 



MINIMIZING OPERATION COSTS 71 

certainly be applied to the tail stock. Slide rests and tool holders 
should be simple and strong. The tool must be held rigidly under all 
conditions. The tool posts should be set down lower than is custom- 
ary in everyday practice. Under modern conditions much greater 
feeding power is needed. 

But however certain we may be that defects in machine tools have 
a direct effect upon the rate of production and the cost of the product, 
existing conditions may prevent purchase of new tools. Inasmuch 
as I have been through the mill several times with run-down concerns, 
I appreciate fully the fact that most manufacturers are obliged, 
through sheer financial stress, to ignore any scheme, no matter how 
promising, that involves at the outset a thorough replacement of the 
existing machinery with the most modern types, even though it can 
be demonstrated that the latter are 50 per cent more efficient. 

The practical question that confronts many a manager is : " What 
on earth can I accomplish with my present old c rattle traps' of machine 
tools? I couldn't buy gold dollars for 98 cents if I had to pay cash, 
much less spend thousands for replacing my present machinery. I 
must first make good with what I have. After we are on firm ground 
we'll talk about stronger and better machine tools." 

True! Very true! A viewpoint very often overlooked by the 
manager, or by the man who has this work in charge but doesn't have 
to produce the dollars to "keep the old ship afloat." This latter 
situation, which is a stern actuality with many a man who is eager 
to improve conditions, is all compelling and must give shape to the 
preliminary methods of procedure. This I shall try to keep in mind. 

Granting, however, the hard fact that many concerns are obliged 
first to dig out the problem, using their existing facilities, it is of all 
the greater importance that two reports relative to machine tools be 
made out: — 

First, a report showing what heavier, stiffer, and more efficient 
types of machines should be substituted for existing types when the 
proper time comes. 



72 PROFIT-MAKING MANAGEMENT 

Second, a full report upon each and every machine tool in the 
shop, showing its points of weakness and its limitations in cutting 
speeds, feeds, and depth of cuts ; how it can be strengthened ; a descrip- 
tion of the kind of work that should be done on it ; a record of best 
times on jobs; a full statement of the best machine tool to substitute 
for it, and a clear-cut comparison of possible production by the use 
of the latter machines. 

I warn you again that unless this be done systematically at the 
start, it probably never will be done ; then as time goes on you will 
find yourself burdened with many a newly purchased machine tool 
just as weak and inefficient as the older one it replaces. 

In considering the problems of increasing production in any par- 
ticular shop, we find therefore that they become problems of devising 
methods and making tests upon the supposition that existing machines 
and facilities must be used in regular production — that, however 
advantageous the latter types of tools, the important question of low- 
ering costs must be considered on the basis of developing to the 
uttermost the efficiency of the present machinery. We must there- 
fore keep in mind these points in the building up of our system. The 
great importance of gathering all our data systematically and of using 
them scientifically cannot be too strongly insisted upon. 



Chapter VII. 

POSSIBILITIES ATTENDING THE USE OF HIGH-SPEED 

STEEL. 

/"^LOSELY linked with the study of the design, character, and 
^^ remodelling of the existing machine tools, is the second great 
step in the betterment of machine processes — the use of high-speed 
steel cutting tools. 

The possibilities underlying their introduction and full employ- 
ment have been thoroughly discussed by other writers and proven 
again and again in everyday shop practice where thorough methods 
have been adopted. It is sufficient to say that the increase in produc- 
tion over that secured through the use of the older carbon steels may 
be expected to reach from 40 per cent to 85 per cent (depending 
upon the character of the metal being cut) if the machine tools are 
in proper condition to withstand the strains of the increased cutting 
speeds, feeds, and cuts. If the shop under consideration is in a run- 
down condition, and there has been lack of system in shop processes 
as well as lack of efficiency in production methods, a much greater 
increase than 90 per cent may reasonably be expected. I have noted 
myself records of over 200 per cent increase in efficiency and out- 
put, and have been shown records in a number of cases that exceed 
300 per cent. Of course to anticipate such large increases in all cases 
would be foolish, but there are many cases today where such results 
are well within the range of possibility. Such a prize is well worth 
fighting for. 

Before passing to the important questions that follow I cannot for- 
bear pressing upon the interesting fact that in a great number of 
shops the recognition of, and the tremendous enthusiasm for, possibili- 

73 



74 PROFIT-MAKING MANAGEMENT 

ties of high-speed steel for cutting tools and for better production 
processes, seem to be confined to the primary installation and the first 
fever of enthusiasm over its introduction; after this, the shop often 
settles down to a dead level of production far below its proper point, 
and the ultimate increase in efficiency, instead of being fully 60 per 
cent or more, is nearer 12 per cent. 

How often have I seen a shop, in its first spasm of delight over 
the discovery of high-speed steel and its possibilities of increase in 
production as applied to their peculiar circumstances, eagerly scan- 
ning new records, planning great things for the future, Often the 
officials are brought into the shop to see the first results. Mayhap 
the president will take into his office some of the pieces for paper 
weights, look them over gleefully, compare the new and the old 
records with the fine showing of increased efficiency, and take pleasure 
in the thought of what he will do to the trade when all his work is 
produced at such a low cost. And then this matter of getting the 
best results from the new methods is placed in the hands of a few 
ignorant foremen — each with different ideas as to the forging , dress- 
ing, hardening, and grinding of these tools, with no definite idea as to 
proper shapes, angles, and clearances, and no real knowledge of the 
possibilities of production that rest in the proper treatment of the 
problem. Soon the entire important question is swallowed up in the 
pressing problems of everyday production, and the only real knowl- 
edge that the manager possesses on the subject is that " We are buy- 
ing and using regularly brands of such-and-such a make of high- 
speed steel." 

Later on the official will pick up his "paper weight" and wonder 
what has become of the expected reduction in labor cost that at 
first appeared so simple to make. Somehow or other his cost records 
do not show those material reductions that he assumed were assured. 
The cause? Lack of method. 

This is no fairy story nor dream. If the manager of the average 
concern wants to ascertain the fact that these comments in all proba- 



HIGH-SPEED STEEL 75 

bility apply to his own shops, let him, after ascertaining what should be 
accomplished upon, say, certain classes of lathe work, then go down 
into the shop and ascertain for himself just what is being done. And 
while on the way to the shop itself, don't stop at the factory office and 
ask any foolish questions, for if you do, "information galore" will be 
your lot, but as for actual facts right from the machine tool — little 
of it for your portion! But let us turn to measures by which the 
use of high-speed steel may be made to yield the maximum results in 
regular work: — 

The Provision of Abundant Cutting Tools. 

The determination of proper and standard shapes for cutting tools, 
and the supply of a sufficient quantity to avoid lost time is the first 
point of attack. Before another step is taken these standard tool 
shapes must be determined and must be rigidly adhered to. The old tool 
dresser, who is in all probability totally ignorant of the proper shapes 
of tools as determined by scientific experiments, and probably stub- 
bornly sticking to his "home-made" knowledge of hardening the 
modern tool steels, must be eliminated. The practice of allowing 
a hundred workmen to grind their tools in a hundred different ways 
must positively be stopped. 

In place of these haphazard, inefficient methods must be substi- 
tuted those that will lead to the adoption of standards proven by ex- 
periments and experience to be efficient, and these must be adhered 
to without deviation. 

In view of the differing opinions of factory men upon the subject 
of proper shape of tools, it is fortunate that we can refer to the results 
of and deductions from the experiments of Dr. Nicholson, and later, 
and indeed especially, to those of Mr. F. W. Taylor of Philadelphia, 
as guides which can safely be followed. The latter tests of Mr. 
Taylor are especially exhaustive and convincing. The results of the 
tests performed in a modest way under my direction are confirmed by 
Mr. Taylor's data. The limits of this article prevent any lengthy dis- 



76 PEOFIT-MAKING MANAGEMENT 

cussion of the many important points to be observed; they must 
be skeletonized only. 

1. — In determining the most effective shape for any tool, such as 
for instance a lathe tool, careful consideration must be given to the 
fact that limitations may have to be placed upon the shape which 
would provide the greatest cutting efficiency, by the necessity of con- 
sidering the difficulty and cost of forging and grinding. These costs 
may prove such as to require a modification of the type which per se 
would be the most efficient. 

2. — The dynamometer tests by Dr. Nicholson demonstrated the 
fact that a tool with lip angle of 54 degrees (cutting angle 60 degrees, 
clearance 6 degrees) would remove soft steel at a low degree of pres- 
sure. Such an acute angle, however, can hardly be considered for 
commercial use, because of the danger of crumbling. He established 
the fact, however, that we should generally adopt the sharpest angle 
of cutting tool that would not crumble under the strain of working 
conditions. His tests showed that on medium cast iron cutting angles 
should be 76 to 80 degrees (with, clearance of 6 degrees) and con- 
sequently their lip angle should be about 70 to 74 degrees. His tests 
upon soft steel were not conclusive because of work conditions, 
but the tests he made indicate that a cutting angle of about 70 
degrees (lip angle 64 to 65 degrees) lasted the longest time in rapid 
cutting. 

Mr. F. W. Taylor's tests show that tools for cutting softer steels 
should have a clearance angle of 6 degrees, back slope of 8 degrees, 
side slope of 22 degrees, or a lip angle of 61 degrees. For cutting 
cast iron and harder steel the tool should have clearance angle of 6 
degrees, back slope of 8 degrees, side slope 14 degrees, or a lip angle 
of 68 degrees. On harder steel a clearance angle of 6 degrees, back 
slope of 5 degrees, side slope 9 degrees, or a lip angle of 74 degrees 
is recommended. On chilled iron a lip angle of 86 to 90 degrees is 
recommended. 

Great care must be exercised to see that the point of the tool is 



HIGH-SPEED STEEL 77 

blunt to such a degree that crumbling cannot occur. The round- 
nose tool with a large radius of curvature has been adopted by me 
as the best of its type, although straight broad-nosed tools can at times 
be used to good effect. As regards the question of side slope vs. back 
slope I favor steep side slope, though guarding to the utmost possible 
against gouging into, the work. A combination of these two can be 
secured that will produce good results. 

This question of shapes of tools must be thoroughly thrashed out 
and settled by the expert and the committee before another step is 
taken. Decide upon your standard types. But whatever types are 
decided upon, by all means adopt a few set rules in regard to tools, 
and stick to them. 

First. Reduce your sizes of tools and the types of tool steel to a 
minimum. 

Second. Adopt standard shapes and then don't change them. 

Third. Stock up your tool-supply room with plenty of small tools. 
Keep the workmen supplied. 

Forging. — The final standard shapes of tools having been decided 
upon, then take up the important question of the proper forging of 
the tools. Here is where vigilance should begin. In the first place, 
limit gauges will pay. Your tools must be forged to the correct 
shape and in such a manner as to reduce the preliminary grinding 
to a minimum. The shapes must be considered with care so as to 
provide for cheap and effective tool grinding after the tool begins 
its life of usefulness. Naturally the conclusions reached in the con- 
sideration of standard shapes will influence very largely the methods 
of forging. Do not run the risk of starting cracks in your tool steel 
by nicking it and breaking the pieces off cold. In heating the tool do 
it slowly so that the heat will have ample time to penetrate the entire 
bar. Unless this is done cracks may develop. Bring it up to a light 
yellow. 

Hardening. — Considering the large volume of good information 
now available as to the best methods of hardening high-speed tool 



78 PROFIT-MAKING MANAGEMENT 

steel, it is strange how often we find the toolsmiths adhering to plans 
of their own. 

It is of great importance that your toolsmiths should be given to 
understand that any adherence to the old " color" ideas in the pro- 
cesses of hardening must be absolutely abandoned, and that the newer 
methods of hardening recommended by the makers of tool steel must 
be absolutely followed. At one time the methods described by the 
makers were unnecessarily complicated, in order to throw a certain 
degree of mystery around the processes, but of late the tendency has 
been toward a decided simplification. 

It is highly desirable that the number of grades of high-speed 
steel used in a shop be reduced to as low a number as possible — 
certainly not over two, and, if possible, one — and that a thorough 
standard method of hardening be adopted, and adhered to. Owing 
to the tendency of the ordinary toolsmith to slip back into his old 
slipshod ways, it is important that some accurate record of his hard- 
ening processes and some check be kept upon him, especially during 
the period when practical methods of hardening are being introduced 
and thoroughly standardized. The record need be only a simple one, 
but must be sufficient to enable you to trace unerringly any defects 
appearing in the tools due to bad process of hardening, and to center 
the responsibility for these mistakes upon the toolsmith responsible 
for them. 

I therefore suggest the form on the opposite page for keeping hard- 
ening and tempering records. 

The methods of hardening lathe, planer and boring tools are fully 
described by the makers. Generally the forged nose of the tool is 
placed in a well-burned-through coke or coal fire, and brought slowly 
to a white welding heat. This heat should be raised to a point where 
the nose begins to soften. Care should be taken to see that this 
heat extends over fully three-quarters of an inch of the nose. At this 
fusing heat, the white-hot part should be put immediately under the 
strongest and coldest air blast which is available, compressed air being 



HIGH-SPEED STEEL 



79 



Hardening Records. 
Date 



Tools 



Size 



Quality of Steel Lot No. 



Remarks 



Hardening Heat Temperature. 
Cooling Agents. 
Tempering Heat Temperature. 
Toolsmith . 



If defective, Why?. 



FORM FOR HARDENING RECORDS. 

the best to use. Under no circumstances must the tool be brought in 
contact with water while it is hot. It is probably preferable to harden 
the white-hot nose of the tool in fish or lard oil until it grows mode- 
rately cool, and then to continue the cooling-off under a cold blast. 

Mr. Taylor, in his description of the heat treatments, brings out 
the important feature that the nose of the tool should be heated 
slowly to a bright cherry red, so that the heat may penetrate to the 
center of the tool. From the bright cherry red up to the melting 
point, the tool should be heated as rapidly as possible in an intensely 
hot fire until the nose of the tool begins to soften. He urges very 
strongly the importance of using an intensely hot fire for the second 
period of heating. 

The cooling of the tool should be done rapidly until it is below 
1,550 degrees F. From this point it makes little difference whether 



80 PROFIT-MAKING MANAGEMENT 

it is cooled rapidly or slowly. Mr. Taylor advises the use of a bath 
of red-hot molten lead in bringing the tool down below a temperature 
of 1,550 degrees. 

In his article on the "Art of Cutting Metals" he brings out the 
advantage of the second or low-heat treatment, which is obtained by 
re-heating the tool which has had the high-heat treatment to a tem- 
perature between 700 and 1 ,240 degrees F. Great care, however, must 
be used to see that the higher temperature is not exceeded, for should 
this happen the quality of the tool will be seriously affected. 

For the heating of special form tools, milling cutters, etc., special 
methods are of course necessary, the use of the ordinary coke or 
coal fire being out of the question. Where a number of these parts 
are heated at a time, great care must be taken to see that they do 
not touch one another. Special furnaces should be used. These can 
now be purchased for a reasonable figure. In these furnaces the work 
can be properly suspended so that separate pieces will not come in 
contact with one another, and accurate control of the heating can be 
secured with the aid of a pyrometer. 

Grinding. — As was pointed out under the heading of shapes of tools 
and forging, it is necessary to determine these shapes with care so 
that the cost of grinding the tools will not be excessive. 

It seems hardly necessary to assert the importance of having all 
tools ground in one place and according to standard shapes. There 
are, however, a surprising number of shops still left in which the 
workmen are allowed to^ grind their own tools in their own way. 
Inasmuch as tests show that the shape to which a tool is ground will 
affect its efficiency to a very high degree, it is perfectly obvious that 
such a plan as allowing the workmen to grind their own tools is 
simply ruinous, to say nothing of the question of wasted time on the 
part of the workmen. 

We must, of course, assume that under the heading of shape of 
tools the manufacturer has determined just what grinding angles 
should be adopted throughout. It is of much importance that these 



HIGH-SPEED STEEL 81 

angles be rigidly adhered to, not only because they will prove the 
most efficient, but also because all the tabulations which any one may 
make up for any particular shop will be based upon these standard 
shapes and consequently any variation from these shapes will tend 
to vitiate the records and so annul the good points of the determina- 
tion of standard time. 

In my opinion, all grinding of tools should be done by automatic 
machines, so that all angles can be ground uniformly. If, however, 
this grinding is still to be done by hand, it is very important that you 
get a thoroughly skilled man and watch him with extreme care, espe- 
cially at first, to see that he will adhere to your specifications for 
grinding angles. If you do not watch him, he is almost certain to slip 
back to methods of his own or to adopt those of other men in the shop. 
If this grinding is done by hand, then provide the tool grinder with 
proper templates and tables so that the possibility of mistakes will be 
eliminated as far as possible. Such is the importance of grinding 
these tools accurately, however, that an automatic machine grinder 
will be found almost necessary. 

Overheating of the cutting tool during grinding is one of the 
greatest causes of deterioration of quality. Caution is generally 
impressed upon the people handling these tools, and it can not 
be urged upon them too strongly. Many a tool apparently in good 
condition has been ruined by overheating in the grinding operation. 
The tool should be moved continually. A cooling agent directly on 
the nose of the tool should always be used. Many makers of high- 
speed steel state that while grinding on a dry wheel may be done, 
at the same time great care must be taken to see that the tool is not 
discolored, i. e., overheated. 

I concur in the statement of Mr. Taylor that on the average a 
lathe tool should be so operated that grinding would be required at 
the end of an hour and a half, going, of course, upon the presumption 
that the tool is of standard, high-grade quality. In many of the tests 
on which records have been presented and in the data which are 



82 PROFIT-MAKING MANAGEMENT 

always submitted by the high-speed steel maufacturers, we find a 
continual reference to the length of time a tool runs without regrind- 
ing. This, however, is of very little interest to the average manufac- 
turer, as the question is not how long a tool may run without regrind- 
ing, but how much should a tool be forced so as to produce the most 
work with a minimum expense for grinding, keeping in mind at all 
times that the crowding of the machine tool is the important con- 
sideration. The question of how long a tool may run without regrind- 
ing sinks into the background, especially if the grinding of a tool may 
be done in a scientific manner by automatic grinders. 

The use of cooling agents, such as soda water, is highly desirable. 
An increase in production of 35 per cent on medium and soft steel can 
be secured through the use of a properly directed heavy stream of 
water. 

Finally, let me urge the necessity of keeping a large supply of 
tools already ground up in the tool-supply room, so that, under no 
circumstances, will the workman be compelled to wait for his cutting 
tools. This is an important point and is often overlooked. 



Chapter VIII. 

THE DETERMINATION OF STANDARD TIMES FOR 
MACHINING OPERATIONS. 

A SSUMING that we have determined upon standard shapes and 
•£*• have the proper facilities and men for the forging, hardening 
and grinding of tools properly, we now come to the consideration of 
the question of making such experiments as will make it possible 
to determine with a high degree of accuracy just what the shop ought 
to be able to accomplish in the way of production with the existing 
equipment. 

To sum up anew the elements of the problem before us, the "stand- 
ard times" for any shop depend upon the following: 

1. — The character and limitations of the existing machine tools, 
2. — The introduction and use of high-speed steel for cutting tools. 
This will include : — 

a. The determination of the proper shapes for tools. 

b. The provision for proper treatment of steel of this char- 

acter in forging, hardening and grinding. 

c. The determination of the best working conditions possi- 

ble, such as the cooling agent, etc. 
3. — The securing of the maximum possibilities in cutting speeds. 
This includes: — 

a. The careful consideration of tests already made and sub- 

mitted by different investigators, giving of course due 
thought to the conditions existing at the time of the test. 

b. The adaptation of these records to existing shop condi- 

tions and the making of thorough tests in the local 
shop under the limitations imposed by types of machine 
tools existing in the shop. 
83 



84 PROFIT-MAKING MANAGEMENT 

4. — The collation of all production data upon a systematic plan and 
their arrangement so that they can be used. 

a. The instruction of the foreman and the workman as to the 

results to be expected and how to secure them. 

b. The insurance that the every-day production follows closely 

this standard of efficiency. 

The first and second sections were discussed in the preceding chap- 
ter. The third and fourth — that is, the fixing and the practical intro- 
duction of standard times — remain to be considered. 

The first problem that confronts the factory manager is how to 
start to make tests on the bewildering number of pieces used in 
the manufacture of his particular product. The warning should be 
issued that unless the work of testing is done systematically much 
of it will be done without avail and great loss of time will follow. 

Classification of Parts. 

I have usually found it possible, and strongly advisable, to divide 
into groups or classifications the parts which are to be manufactured 
according to these new methods. The first separation which would 
occur to any one would be that according to the quality of metal used. 
The second grouping will depend altogether upon the article that is 
being manufactured. Generally it will be found perfectly practicable 
to make a second series of classifications depending upon the similarity 
of design, shape, and mechanical operations necessary. Of course 
where parts are of the same genus but of different sizes, this is a com- 
paratively simple proposition; but it will generally be found upon 
analysis that even a further classification can be made under which 
these groups can be still reduced by considering, as stated above, 
design and similarity of operation. 

I have in mind one shop which required in the course of building, 
assembling, and making the machines the production of some 9,000 
parts. However, by a thorough system of analysis and classification, 
it was found possible to group these 9,000 parts into less than 250 



STANDARD TIMES FOR MACHINING 85 

classifications. It was thus possible to get a clear idea of what should 
be accomplished on these 9,000 pieces through the results of the 250 
tests made in a thorough manner. While it was probably true that 
the deductions made from these tests were not in all cases as thor- 
ough as would have resulted from individual tests, at the same time 
this plan simplified a tremendous problem and enabled the concern 
to get a much quicker start on the right road than if a haphazard 
method of testing these 9,000 pieces had prevailed. 

In studying the question of production in regard to any tool, we 
must consider not only the efficiency of the machine tool and the cut- 
ting tool, but also the time that it takes to set up the job on the 
machine tool in the first place. It is quite probable that a critical 
examination of the way of setting up the work usually practised will 
prove that the method used is capable of alterations which will result 
in a surprising saving of time. A thoroughly scientific method of 
setting up the job usually results in a saving of 30 to 50 per cent in 
the time required by the average workman. It is therefore necessary 
to study this question at the start, as the test is being made, and pre- 
pare a list of instructions giving the different operations required in 
detail and the length of time that should be taken under ordinary 
conditions to accomplish this job of setting up. This determination 
of setting-up time should not be left for future tests, but should be 
done right at the beginning, for if it is not done then, the chances are 
it never will be done. It is easier to do it at the time of the test than 
at any other time. 

Again, we must consider the time required to handle the parts, 
especially if they be small so that they can be clamped in and taken 
out of the machine tool in the shortest possible space of time. A 
thorough study of this one problem should be made at this particular 
period. The importance of this is much greater than is usually 
apparent, especially on parts of small dimensions. 

A short time ago, I noted with particular care a workman oper- 
ating a lathe on a large number of small pieces in a shop where the 



PROFIT-MAKING MANAGEMENT 



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STANDARD TIMES FOR MACHINING 87 

manufacture of small parts prevailed. The machine tool itself was 
well speeded up and the production was quite rapid. It was an actual 
fact, however, that the time consumed by the workman in taking out 
his finished piece and fastening in the machine tool the piece to be 
worked upon, exceeded by quite an appreciable percentage the actual 
length of time required for the machine operation of cutting. 

While this may to the inexperienced man seem to be insignificant, 
at the same time the determination of these points is of the greatest 
value, especially under such conditions as outlined above, because of 
the fact, as stated before, that "time is what we pay for." Every- 
thing possible should be done to cut down that element of time all 
through the shop processes. 

Before starting any tests, care should be taken to see that there is 
provided a cut meter for measuring the cutting speeds, that the belts 
are all in good condition, and that the proportion of pulley speeds 
is carefully checked up. The depth of cut should be very carefully 
measured, and, as stated before, care should be taken to see that you 
have tools of uniform character and plenty of them. Even at risk of 
reiteration, I want to emphasize the importance of this provision being 
made in advance. 

Whatever the condition of your shop and whatever the system of 
management, it is altogether probable that an expert tester will be 
absolutely necessary. This man should be one who is totally removed 
from the influence of the foremen or any of the workmen. He should 
when possible be placed in some part of the factory where he can 
work practically unobserved and certainly undisturbed. Wherever his 
tests are made — specially or in the shop — his reports should be 
carefully checked up and should be invariably sent to the head office, 
he being given to understand that he is responsible to the officers 
alone. The importance of having an expert of this character lies not 
only in the necessity of securing accurate tests upon which you can 
depend, but also upon the absolute necessity of training up some man 
who can properly analyze the possibilities of production, fill out the 



88 



PROFIT-MAKING MANAGEMENT 



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STANDARD TIMES FOR MACHINING 89 

proper instructions, and be in a position to see, as speed boss, that 
the men are thoroughly informed as to the methods to be adopted in 
proving the results which his tests show possible. It is absolutely 
necessary that you be in a position to demonstrate to your workmen 
that work can be done in the time set for it, by actual demonstration. 
No one can do this better than this expert tester, and no one would 
be in a better position to show the workmen how to accomplish the 
result himself. A man in this position should not only have a high 
degree of ability as a mechanic, but should also possess a goodly 
amount of tact. 

Table of Planer Speeds on Bessemer Plates. 

Feed on Different Thicknesses of Plates in 
Inches. 

* I 

.18 
.09 
.09 
.15 
.15 
6— ( 98) 28 52 .036 .055 .062 .11 

Tool to be ground at the end of one hour and thirty minutes on the Bessemer plates. 

The tables presented on pages 86 to 90 show the best results, to my 
knowledge, to be obtained on first-class machine tools, such as lathes,* 

* The data on lathe work represent the result of experiments made by Mr. F. W. 
Taylor and his associates and were presented before the American Society of Mechan- 
ical Engineers in his paper on the Art of Cutting Metals. The data are presented 
with Mr. Taylor's consent and are the most comprehensive and valuable of any so 
far presented to the manufacturing public, to my knowledge. The data confirm 
throughout in a very striking manner the experiments performed in factories under 
my direction. They are, however, more complete than the tests made under my 
supervision. 

Our tests on lathes, planers, punches and dies were made with both the Novo 
high-speed steel of Herman Boker, N. Y., and the Bohler new rapid steel of Hough- 
ton and Richards, Cleveland, Ohio, from both of which we have secured most excel- 
lent and uniform results. The drilling data were compiled from a series of tests 
made in our own shops with drills manufactured by the George H. Rich Manufactur- 





Speed 


in Feet. 


Feed 


Jrlaner 
dumber. 


Cut. 


Return. 


1 


1— ( 82) 


19 


77 


.06 


2— (767) 


30 


97 


.03 


3— (793) 


30 


88 


.03 


4— ( 96) 


22 


45 


.05 


5— (107) 


22 


45 


.05 



.09 


.12 


.045 


.06 


.045 


.06 


.075 


.1 


.075 


.1 



90 



PROFIT-MAKING MANAGEMENT 



Table of Speeds and Feeds on Drills.* 



Size, Inches. 


Speed. 


Feed 


i 


430 


.018 


f 


330 


.019 


! 


280 


.019 


i 


255 


.019 




250 


.020 


n 


245 


.020 


H 


240 


.020 


if 


230 


.020 


i* 


210 


.020 


if 


200 


.020 


if 


195 


.020 


if 


190 


.020 


2 


180 


.020 



planers, shapers, drilling machines. Without some such standard 
guide, the proposition of making a series of standard-time tests in 
the ordinary factory is indeed a very difficult one. The results shown 
in the tables may not in all points prove to be the limit as far as pro- 
duction is concerned ; but they represent the best so far obtained, and 
are far in excess of those usually secured, so that they can be safely 
used as a basis upon which to work and they make the determination 
of the best time in which a job should be done a comparatively simple 
matter, as concerns the machine work alone. Inasmuch, however, as 
they were obtained under first-class conditions, the state of the exist- 
ing machinery in the average shop will render a modification of these 
rules and tables quite necessary. It is for this reason that the investi- 
gation of existing machinery (referred to in Chapter VI) must be 
undertaken first, and the tabulations so modified as to apply to the 
existing circumstances. 



ing Co., Buchanan, Mich. The tests on planing and drilling tools were made under 
the direct supervision of the factory manager of the Herring-Hall-Marvin Safe Co., 
Mr. E. E. Watson. 

*Tests made in shops of Herring Hall-Marvin-Safe Company upon which cast iron, 
using drills manufactured by Rich Manufacturing Company, Buchanan, Mich. 



STANDARD TIMES FOR MACHINING 91 

By the use of tables on lathe work similar to those prepared by 
Mr. Taylor, I have been enabled in several cases to make large 
reductions in the force of machine hands. In one instance several 
years ago, the introduction of a speed boss skilled in the use of these 
data resulted in cutting down a machine force of 63 men to 22 men 
within a period of 3J weeks. In another case, a reduction of over 
50 per cent in a large machining department was secured within 5 
weeks of the time these tables had been placed in the hands of an 
efficient foreman and measures taken to see that stock was furnished 
to his machines promptly. In another case a simple system of using 
the tables made it possible to reduce the number of planers from 19 
to 13. Even with this reduction, the remaining 13 planers gave a 
much larger output than had formerly been secured from 19. 

A systematic use of the tables on the drilling machines produced 
even more surprising results. In several cases within my own expe- 
rience a reduction in prices of over 50 per cent was made possible, 
and in one particular case a reduction of even 75 per cent. 

Of course the possibilities of saving in any one shop would depend 
upon the production conditions existing at the time the tests and 
examinations were made, but it is safe to say that large economies 
will result if such tables can be put in effective use in a manufacturing 
shop. 

I have brought out previously the importance of classifying all 
of the manufactured parts so that attention can be concentrated upon 
those which are truly representative of each separate classification. 
And in determining the best place of attack in the classification it is 
well to remember that, in the average shop, there is usually at least 
one point which, through bad equipment or ineffective direction, is 
practically retarding shop progress throughout. With ordinary fore- 
manship it is almost impossible to discover the existence of such con- 
ditions. The Tool-Room Committee and the tester, who is destined to 
become later the speed boss, should therefore first determine the classi- 
fications and the best point of attack. After time calculations have 



92 PROFIT-MAKING MANAGEMENT 

been made and approved by the Committee, with the aid of the tables 
just given, they should be placed on record cards (which will be con- 
sidered later) to be confirmed by the tester in actual trials. 

It is important, however, to note that in the manufacture of either 
single large pieces or many small parts, there are a number of ele- 
ments entering into the cost of production, other than that of ma- 
chining, which are always of sufficient importance to merit the closest 
consideration. In fact, very often it is the lack of attention to these 
other factors that accounts for much lost time. This is particularly 
the case where large quantities of small parts are manufactured, each 
part in itself requiring but a slight machining operation. 

Almost without exception the tables which have been so far pre- 
sented represent machining of rather large bodies, while in many cases 
in actual manufacture the problem is one of the turning out of 
product of small dimensions. The question of "handling time" in 
this case becomes of paramount importance. This brings us at once 
to a consideration of the following requirements, all of which must 
be considered by the committee, whether the pieces or the quantity 
be large or small : 

1. — There must be ample stock delivered to the workman before 
he stops work upon his preceding job. This is an item of practice 
which will in itself bring surprisingly large returns in efficient pro- 
duction. In fact, if nothing more were accomplished than the con- 
stant supplying of the workman with plenty of stock, under a good 
routing system, and plenty of good tools of standard shape and prop- 
erly hardened, the efficiency of the average shop would be increased 
probably 33^ per cent. This question will be dealt with later, but 
reference may be made to my articles upon stock system routing and 
stock tracing — in which particular emphasis is laid upon the stock 
tracer, his work, and his authority — and upon inspection, etc., in The 
Engineering Magazine, May, June, 1902. 

2. — The stock must be so placed as to be most easily reached or 
handled by the workman. This presupposes a standard place for the 



STANDARD TIMES FOR MACHINING 93 

stock. In the case of large, heavy pieces, standard handling devices 
must be provided. 

3. — The clamping devices must be simple, effective, and standard, 
and must be supplied to the workman before he is ready to start. 
Much study may be given profitably to this point. 

4. — The tools must be standard in every respect, ground to proper 
shapes and must be supplied to the workman before he is ready to 
start his work. 

5. — The jigs, fixtures, punches, dies, gauges, etc., must be so 
designed as to be handled easily, quickly, and accurately, and must be 
at the workman's side before he is ready to begin work upon his new 
job. Much profitable study can be given to the question of proper 
tools. These tools and gauges must be inspected for accuracy regu- 
larly so that the foreman and workman may have full confidence in 
them. 

6. — All stock coming into a department from some other depart- 
ment must be inspected before it is placed upon the department plat- 
form. Whether the work is large or small, inspection is absolutely 
necessary. For further details on this matter it may prove of interest 
'to note the rather full treatment of the subject of inspection in my 
articles appearing in The Engineering Magazine in 1902. 

Full mention is made of the requirements at this point for, while 
some of them are far removed from the single problem of machining, 
they still form a most vital part of the " time required to complete a 
job," and most certainly no "standard" or "shortest" time can ever be 
reached unless they are considered and standard methods in each case 
installed. And again they must be considered when we attempt to 
set a "standard time" upon assembling jobs. 



Chapter IX. 

STANDARD TIMES FOR HANDLING THE WORK. 

RANTING that the six requirements stipulated in the preceding 
chapter have been fulfilled — that is, that stock is provided in 
ample quantity, that standard places are provided, standard clamp- 
ing devices, tools, jigs and fixtures introduced, and inspection estab- 
lished — we next come to the consideration of: — 

1. — The time required to handle the part or parts. 

2. — The time required to "set up" the job. 

3. — The time required to machine the work (to gauge or draw- 
ing). 

4. — The time required to remove the work. 

In making any study of the time required on these different parts 
of a job, an accurate stop watch should be used. One with two hands, 
either of which may be stopped while the other continues to run, is 
the best type. It is especially valuable in noting the time required for 
some particular portion of the work itself, by stopping one of the 
hands and then noting the actual time lost between the essential por- 
tions of the operations as shown by the elapsed time indicated by 
stoppage of the other hand. This is particularly useful in noting the 
operations of assembling. Some uniform tabulation in recording 
experiments or conclusions should be used from the start. The 
records submitted are suggestive only, but contain the essential 
points. The proper forms must be evolved for each case. Features 
non-essential in one concern may be very important in another; e. g., 
" setting up," a job which in some types of manufacturing may be 
relatively important, while in others it is a very simple one. The same 
statement can be made with especial emphasis in regard to machining, 

94 



STANDARD TIMES FOR HANDLING 95 

particularly as regards the production of stock on automatic ma- 
chines, such as screw machines, or semi-automatics, such as turret 
lathes. 

The Determination of Handling Time. 

The time required to handle the parts is an important considera- 
tion, whether the tool be a lathe, planer, mill punch press, or drill 
press. An astonishingly large proportion of lost time can be attrib- 
uted to lack of proper facilities for handling work, lack of methods in 
handling it, and the tendency of the workman to kill time during the 
period which offers so good an opportunity. In the case of heavy 
work it will always pay to have good hoisting and handling facilities 
over each tool. They may take the form of compressed-air hoists or 
an overhead single track carrying an electric hoist serving a number 
of machines — a very economical arrangement. In some cases the use 
of specially designed magnetic hoists will greatly facilitate such work. 
Close attention should be paid to the clamping devices, so that little 
time will be lost in attaching to or loosening from the part. A care- 
fully considered and standard method of piling or placing the parts 
will often enable this clamping to be done very quickly. 

In the handling of light work there are several points of import- 
ance that must be considered. 

Wherever possible the stock should be carried in boxes. These 
boxes should be standardized so that as few sizes as possible need be 
used. They should contain tin pockets on the side in which the 
necessary cards can be placed. In many cases it pays to arrange 
the boxes with movable shelves so that the stock can not only be 
easily handled but can be much better protected in carrying it through 
the shop. Stock requiring close work is often injured through bruis- 
ing. Again, such a method makes the removal of the stock from the 
box by both the machine hand and the inspector much simpler. 

Careful judgment should be used in selecting the place where the 
box shall stand. Very often a low, strong table about the height of the 
ordinary hand truck will be found advisable. The use of this table 



96 



PROFIT-MAKING MANAGEMENT 



Testing Records. 



Date 

Machine Tool 
Cutting Tool 

Setting Up Time (analyzed). 



Name or No. of Part 
Classification 
Quality of Metal 
No. of parts tested 



O 03 



M 

n S 

M 


ft 3 
P 


03 
HI 
fa 


a a 


6 

01 

H 


"8 

03 in 
B 03 


B M 

B 

■ -< -+^ o 

■OSO 
BOH 


B§H 
©■g 


So 





















Genebal 



Standard Time for Setting Up (see instructions) 
Standard Time for Handling Parts (see instructions) 

Standard Depth of Cut 

Standard Feed 

Standard Cutting Speed 

Note. Tool to be so speeded that cutting tools will require 
regrinding at the end of 1| hrs. run if limitations of machine 
tools will permit. 



FORM SUITABLE FOR TESTING RECORDS. 

immediately standardizes the spot where the stock shall be placed, 
makes it easier for the truckers to handle the boxes, and, in addition 
to this, saves the work and time of the machine hand in stooping over 
to pick the parts out of the box. The placing of these boxes in the 
same position each time — the fact that the workman becomes accus- 



STANDARD TIMES FOR HANDLING 97 

tomed to finding his stock always in the same spot — adds appreciably 
to the speed of handling. 

In the space beneath this table there can usually be 'placed an 
additional shelf to contain the tool boxes for the different jobs which 
will be apportioned to the workman. 

If this rule of carefully standardizing the place before each machine 
where stock is to be placed is adopted, the question of determining 
the handling time becomes comparatively simple. A series of stop- 
watch tests upon a quick-moving workman will usually be found to 
be sufficiently accurate. It is well, however, to check this up by 
actual trial on the part of the tester. Full data relative to each test 
should invariably be placed upon the record cards. 

Setting-up Time. 

The "setting" up of jobs on lathes, planers, shapers, milling machines; 
punch presses, drill presses is so varied that no set rules can be laid 
down relative to it. A close study of all the conditions under each 
classification of work is very necessary. Tests should be made with 
stop-watch observations covering each portion of the setting-up job. 
When this is first attempted, it will be found almost invariably that 
the clamping devices for the different tools can be very greatly 
improved. 

If the time of the ordinary workman in setting up certain jobs 
is noted carefully, and then the same jobs are selected for analyses, 
very surprising differences between the time that he has required and 
the time that should be required will be found to exist. It being out 
of the question for any one man to determine the best methods of 
procedure in the setting up of jobs, it is therefore wise to submit this 
entire matter to the Tool Room Committee, calling in to such meet- 
ings the several foremen and assistant foremen whose departments 
are affected. The mere fact of calling men in for such important 
discussions will lead not only to correct conclusions, but will also 
act as a spur on them toward the improving of the setting-up con- 



98 PROFIT-MAKING MANAGEMENT 

ditions on the machines in their several departments. In fact, I am 
in favor of special men to set up work requiring a particular degree 
of accuracy. This is particularly so in the case of fine punch-press, 
die, and milling work. A full record of all the analyses of setting-up 
time should be made upon cards at the time of each test. 

Time for Handling Work on the Machine Tools. 

In the case of large work on lathes and planers, the time of handling 
the work on the machine tool is of minor importance, inasmuch as 
the work remains fixed until the machining operations are performed 
upon it. Conditions, however, are different in the case of drill-press 
work and punch-press work. 

The handling of heavy work under a drill press, where a number 
of holes have to be drilled at different points in the piece of work, 
becomes quite a problem. Of course, radial drills are in most cases 
used for such work. In my opinion, however, the average modern 
radial drill is not built strongly enough to withstand the heavy work 
which can be secured from a high-grade, high-speed drill if it is 
pushed to the limit. Better results will be obtained by the construc- 
tion of a heavy drill press, with stationary overhanging arm, the work 
to be moved upon a double-acting table having two movements, one 
at right angles to the other. 

Rapid drilling in a shop is very necessary. It is, of course, im- 
portant from the standpoint of economy in drilling, but the main 
feature to be considered is the fact that when work is sent to the 
drills, nine times out of ten it is then in steady progress of manufac- 
ture throughout the shop and under ordinary conditions, some one 
group of workmen will be found waiting for the drilling opera- 
tions to be finished. This waiting may not be at all apparent, for 
the workmen themselves are very careful to conceal any such fact; 
but undoubtedly much time is lost in the average shop because of lack 
of high speed in the drilling operations. 

Whatever device is adopted for the handling of work, very care- 



STANDARD TIMES FOR HANDLING 99 

ful observation should be taken in order to determine the actual time 
lost in this manner. In punch-press work this handling time becomes 
even more important, inasmuch as in innumerable cases there are a 
number of holes to be punched in one plate or strip of metal. A very- 
close study can profitably be made of the proper types of movable 
tables with indexes and positive stops. In fact, with a carefully 
designed series of stops for the different classes of work, a great deal 
of time ordinarily consumed in laying off the holes for punching can 
be saved. The use of such devices also insures greater accuracy in 
the punching. Ordinarily, the work of the punch-press operator is 
not as accurate as it should be, especially on heavy work. Where this 
inaccuracy exists, it causes an immense amount of trouble throughout 
the shop. 

In the turning out of small parts, the question of handling time 
becomes of paramount importance. The amount of time consumed, 
for instance, in placing small work in a drilling jig, clamping the 
jig. handling the jig, and taking work out, will often be two or even 
three times the time required to do the actual machining operation. 
Therefore a close study should be made, first, of the character of 
these special tools, with a view to reducing to a minimum the handling 
time of the work and to replacing any tools which require an exces- 
sive amount of such time. Granting that the tools are all that they 
should be, a study of the time that should be taken by an expert 
workman then becomes important. This can be settled by stop-watch 
observations and by tests. All data covering such points should be 
recorded immediately. 

Time for Machining Operations. 

This time can be determined from the tables herewith presented, by 
the Committee and the tester together with the foremen and assistant 
foremen of the departments interested. Then this determination of 
time should be checked up upon each piece representing each classi- 
fication by actually trying out the job as an object lesson, if for no 

LOfC. 



100 PROFIT-MAKING MANAGEMENT 

other reason. Later, the proper machining time for the parts under 
each classification can be determined from the tables themselves. 

My reason for strongly recommending Committee action in con- 
junction with the foremen will be discussed later, but a moment's 
thought at this point will show that this line of procedure will force 
the obstinate recalcitrant foreman into line in a hurry. He must give 
his support to the line of action. He is helpless as far as opposition 
is concerned. Furthermore, an improvement in the several depart- 
ments under each foreman's supervision will become evident almost 
immediately. I consider this joint Committee action as absolutely 
necessary to the success of the plan. Always keep in mind that a 
speed boss or tester will be in a position to prove that work can be 
done within the specified time. Keep in mind however that it is 
always necessary to correct promptly any errors that may occur and 
that the workmen can demonstrate do exist. 

Time for Removing Work from Machine Tools. 

If the problem of handling the work originally is properly solved, 
the further problem of determining the proper time to be taken in 
removing work will be solved. The same problem of simple and effec- 
tive clamps and efficient methods of hoisting and lowering work 
appear here. It is, however, necessary to emphasize the necessity 
for piling the work on the floor or on platforms in such a manner 
that it can be easily handled by the moving trucks. In the handling 
of light work it will often pay to give considerable attention to the 
problem how best to put the work into the boxes so as to facilitate 
its handling, to protect it from being marred, to facilitate inspection, 
and to make it easy for the next operator to handle it promptly. The 
relative importance of these different operations, however, varies 
very greatly according to the character of the work. What may 
be the most important feature of one class of work becomes almost 
a non-essential in another class. 



Chapter X. 
STANDARD TIMES FOR ASSEMBLING. 

'HE study of the proper time in which to do assembling work is 
peculiarly difficult. It is a far more puzzling proposition than 
the one of analyzing and determining the proper time in which any 
particular part should be machined. The element of human judg- 
ment and human skill enters so largely into assembling that even 
the closest study will at times fail to give an altogether scientific 
analysis of the quickest time in which any particular job should be 
performed. After a workman has been on an assembling job for a 
number of years, his operations become automatic and can be made 
at a rate of speed that cannot be equalled by any man whom the 
superintendent may elect to "try out" the job, unless he has had 
almost an equal term of experience. A study with the stop watch 
of the length of time required by the workman will often prove almost 
fruitless, because if the man has the slightest suspicion that he is 
being checked up, he will immediately slow his pace. If the job is 
already on piece work, the proposition becomes an especially difficult 
one, for the workman well knows how to keep down his rate of pro- 
duction while apparently keeping up a high rate of speed. It is for 
this reason that the study of assembling work requires particular 
care and especially keen analysis. 

Space prevents any discussion of the essential features of the 
proper organization of an assembling room at this point. I will, how- 
ever, emphasize the important feature that in the assembling of 
articles composed of many intricate parts it is highly advisable to 
separate the assembling operations for any particular job into as 
small a number as possible. If the workman can be confined to two, 

101 



102 PROFIT-MAKING MANAGEMENT 

or at the most three, operations the problem is not a difficult one ; but 
where, as in many cases, the assembler will have from eight to ten 
different operations on a particular part, the solution becomes very 
difficult to find. Because of this very difficulty, it becomes of extreme 
importance that some solution be reached, as the waste of time in the 
ordinary assembling department of the average manufacturing con- 
cern is almost beyond belief. The only method of procedure that I 
have made a success of is as follows : 

1. — Classify all the work, as was suggested in the case of those 
parts which are to be machined. 

2. — Select the most skilful workman in whom you can have con- 
fidence. It will be necessary to make him an assistant foreman and 
hold forth to him promise of future promotion, if the desired results 
are to be secured. This removes him from the influence of the work- 
men and has a direct effect upon the problem. The workmen will 
rarely resent a thorough investigation made by a man under the 
title of assistant foreman, but will invariably bring severe pressure to 
bear upon the ordinary workman who attempts such work, in order to 
force him to use the lowest pace possible without detection. 

3. — Place before the Committee, the testing assemblers, and the 
head of the assembling room, the different jobs as classified and 
analyze their elements to the last degree. 

4. — It would be well at this point to make some close observations 
upon the workmen who are engaged on this work. It will, however, 
be necessary to use the stop watch skilfully so that the time required 
to perform the elements of each operation can be recorded as far as 
may be possible. With the calculated analyses of the elements of the 
work, and the actual record as made by the workman, before the 
Committee, it is then necessary to plan a comprehensive method to be 
pursued in the testing of the work and in the regular assembling oper- 
ations to be done bj 7 the assembling department in the future. 

It will very often be found wise and, in fact necessary to classify 
the work on the separate jobs in a different manner from that ordi- 



STANDARD TIMES FOR ASSEMBLING 103 

narily pursued, so that each assembler will perform only a portion of 
the work that he formerly did in its entirety. This action makes it 
easier to demonstrate to the men that the work can be done within the 
specified time and also assists in putting it beyond their power to 
conceal the best results obtainable. 

5. — In making these tests, it is, of course, essential to surround the 
tester with the best possible conditions. It is, however, necessary to 
keep in mind that your assembling room must be so arranged that 
the same conditions can prevail in everyday manufacture. These con- 
ditions may be specified as follows: 

a. All the work should come to the tester or the assembler 
properly inspected so that the accuracy of the previous operations can 
be assured. 

b. All the parts that are to be assembled must be conveniently 
arranged in logical order. All necessary rivets and screws and tools 
of all descriptions must be placed at a point convenient to the work- 
man and within his reach so that the least amount of effort is re- 
quired to handle them. 

c. Wherever possible inspection should provide for such accu- 
racy of parts as to make it unnecessary for the assembler to do any 
filing or fitting. In every case, however, where such fitting, grinding, 
or drilling has to be done by the assembler, the necessary machinery 
for doing the work must be placed as conveniently as possible. 

d. Every possible facility should be provided for the quick 
handling of the work. In the case of heavy parts, there should be a 
thorough system of hoists and cranes. The stipulations outlined 
under the heading of "Handling of Work" will apply here. 

A very careful consideration of all of these problems and a 
serious attempt to solve them scientifically will bring surprising 
results. 

I have often noted very large savings in time in assembling opera- 
tions, which apparently were performed by workmen at a very high 
rate of speed, working under the piece-work system. A few examples 



104 PROFIT-MAKING MANAGEMENT 

of the benefits of the system advocated, taken from my own experi- 
ence, may prove of interest at this point. 

A few months ago, I witnessed an assembling job, the work of 
which was done according to methods which had been developed 
under a careful study along the lines advocated. The piece-work 
price on the assembling work had formerly been $2.85 per piece. The 
application of these newer methods made it possible for the workman 
to do the entire assembling job in 16 minutes, and this, too, at a pace 
which it is perfectly possible for him to maintain during his entire 
working period. 

Some four years ago, I made comprehensive tests in a very large 
establishment on assembling work requiring a particular degree of 
expertness and dexterity. Inasmuch as it was impossible to secure 
one of the trained workmen (numbering in all over 150) who would 
give his very best efforts to any job that might be set before him, I 
took a man who was an ordinary truckman, who had never been a 
mechanic in any sense of the word, and trained him for a period of 
five weeks before we started him to doing the testing. We naturally 
selected a man who was particularly bright and capable. I do, how- 
ever, want to emphasize the point that this particular individual was 
not a trained mechanic and secured what skill he possessed onty dur- 
ing the five weeks training mentioned above. 

Allowing that each workman should earn on the average of $3.00 
a day, we found that there were 286 jobs that averaged 167 per cent, 
too high. In other words, for every job that formerly cost $1.00 on 
piece work, we found the proper price to be about 38 cents. Even 
then the limit had not been reached, because of the fact that the man 
who was doing the work could not be termed the highest grade of 
mechanic. We found, however, that after six months had elapsed, he 
could easily earn $4.00 a day at the prices on the new basis, whereas 
his former earning had been $3.00 a day. Further investigation 
showed that in this establishment, where 4,700 men were employed, 
there were a number of departments where the work was quite sim- 



STANDARD TIMES FOR ASSEMBLING 103 

ilar but where the piece-work prices were all out of proportion, those 
in one department being greatly in excess of the prices in other de- 
partments doing similar work, this being due to the relative efficiency 
or inefficiency of the foremen in setting prices. We found upon the 
average that this disproportion amounted to over 23 per cent. The 
tests mentioned above were performed in one of the departments 
which was considered the most efficient. In another department — a 
large polishing room containing 123 men — I found another field for 
work of the character advocated. These polishers were supposed to 
be very high grade, their average earning capacity being $4.00 a day. 
The grinding, polishing and buffing included work upon brass, bronze, 
copper, sheet steel, and cast iron. After the work of investigation 
had been under way but a short time, a strike occurred. All of the 
old polishers left in a body. We secured a group of 12 expert pol- 
ishers from other sections of the country, and then, by offering a 
high day-work wage rate, we employed 62 men from the adjoining 
city. It is important to note that these last were men who had never 
been "up against" a polishing or buffing wheel, and knew absolutely 
nothing about the trade. Some were clerks from the company's office 
and others were grocery and dry-goods clerks attracted by the high 
wage rate. Care was exercised to see that they were strong, healthy 
and intelligent. Each experienced polisher was placed in complete 
charge of a group of five of these " green" men. This experienced 
polisher was under no circumstances allowed to do the work himself, 
other than to show these men how to do the work and to train them in 
every possible trick of the trade. Extra rewards were given to these 
experts to get proper results from the men. In addition to this, the 
foreman and assistant foreman of the department, together with the 
writer, were in constant attendance. Unfortunately, my investigation 
of the elements of this work had been so handicapped by the extra 
work incidental to the strike that it was impossible to analyze each 
and every job in the department. The analyses already made, how- 
ever, showed that a reduction of 40 per cent could easily be made 



106 PROFIT-MAKING MANAGEMENT 

and still provide the men with a large enough price to enable them 
to earn a good wage. It was our original intention to place the new 
men upon a day-work system of pay for a period of about eight weeks, 
the management presuming that very slow progress would be made 
for this period at the very least, many of the officers indeed claiming 
that proper results could never be accomplished. 

The analyses of operations and the method of training was pur- 
sued so vigorously, however, that we found it possible to put the 
entire body of men upon piece work at the end of three weeks and 
a half. The new piece-work prices (40 per cent lower than the old 
ones) were given to these "green" men with the assurance that there 
would be no reductions made and that the firm would be glad to have 
them make all the money they could during that period. 

The management was careful to see that the former rigid system 
of inspection was still adhered to in the case of these new men. It is 
a matter of record that at the end of a period of ten weeks the aver- 
age earnings of the men of the department exceeded $5.50 per day. 
The work increased so materially that at the end of six months the 
actual records showed savings in the pay roll in this department 
amounting to over $55,000 per year. 

Had there been time to make a closer time study, it would have 
been possible for the firm to save even a larger amount of money with 
the additional assurance to the workman that he would still have been 
able to earn a large wage. 

These few examples will serve to illustrate the splendid possibili- 
ties of the methods and systems advocated. 

I shall take up later the question of the system of pay to be used 
in case of a shop adopting systems described in this book. It is 
sufficient to say at this point that I regard it as absolutely essential 
that a workman receive a very considerable increase in his daily wage for 
accomplishing the very desirable results which can be secured. My 
object in mentioning this just now is to emphasize the fact that even 
with the best analyses a workman will become so skilful in time on an 



STANDARD TIMES FOR ASSEMBLING 107 

assembling job as to exceed to quite a large degree the calculated 
records, and consequently, in order to secure this extra output, the 
possibility of which lies hidden within the workman's skill, it is 
necessary to offer an additional premium. 

Foremen's Co-operation. 

It has been remarked to me more than once that the most difficult 
of all the problems connected with the introduction of such systems 
as those advocated is that of securing the foremen's co-operation. It 
is undoubtedly true that unless the hearty co-operation of the men 
operating the departments be secured, the system is almost certain 
to fail. It is safe to say that it will be almost impossible to introduce 
these plans in any comprehensive way with a shop organized in the 
ordinary manner. It is for this reason that I venture continually to 
bring forth the effectiveness and, indeed, the necessity for the Com- 
mittees. In securing the foremen's co-operation to these plans, tact 
must be used. Unless the matter is handled delicately, every one of 
them will feel that his department is going to be "shown up," and 
the new record will be compared against his own record to his own 
disadvantage. Naturally, therefore, this consideration will lead him 
to covertly oppose the introduction and success of the methods at 
every point. When, however, these matters are considered in their 
presence with the Tool Room Committee and the tester, together with 
the tabulation, they are placed in a position where they must wheel in 
line and give their support to the system. 

By calling all of them constantly into consultation with the Com- 
mittee, they are placed in a position where they cannot defend any 
unfair attitude toward these methods. Give them to understand that 
if they have anything to say in opposition to the plans the Committee 
room is the place to say them, and under no circumstances tolerate 
a word of criticism outside of the Committee room. If they are made 
to see that the results are obtained through new methods entirely, and 
that they are not to be criticized nor held responsible for the results 



108 PROFIT-MAKING MANAGEMENT 

formerly obtained under the old conditions, they will soon lend their 
enthusiastic support to these plans. Let me again assure any one 
considering the introduction of these plans that this support is abso- 
lutely necessary. 

I have always found that if this important question is handled 
along the lines indicated, and, in addition to this, the foremen are 
given to understand the success of the system would mean addition 
to their remuneration, their hearty co-operation will be secured. 



Chapter XI. 

STIMULATING PRODUCTION BY THE WAGE SYSTEM. 

TN the preceding chapters methods of determining with accuracy 
-*• the shortest possible time in which any job can be done were 
fully discussed. There I dealt with the latest tables showing the best 
possible cutting speeds on lathes, planers, and drill presses, and also 
described methods by which the shortest possible time on intricate 
assembling jobs can be determined. Naturally, the determination of 
this "shortest time" — this fixing of the "standard time" — will prove 
of great assistance in the collection of prime labor cost data on any and 
all jobs of work. 

Before giving consideration to systems of cost-keeping or to the 
stock-keeping and stock-tracing systems which are interlocked there- 
with, it is important that we briefly consider the question of the wage 
system under which the men must work, and which to them is the 
all important feature of their shop life. 

We manufacturers must keep in mind just what actual shop life 
and the wage system mean to a workman. We, who have crawled 
up the scale, now look upon a broader horizon of opportunity. We 
are not surrounded by those inexorable conditions which to a large 
extent absolutely regulate the life of the average workman. We are 
not subject to the whim of a job boss or assistant foreman, who holds 
his place perchance through favoritism or relationship to someone in 
power, and who looks with frowning mien upon any improvement 
which might be suggested and for which he may not get the credit; 
whose control over five-twelfths of daily existence is well-nigh abso- 
lute; who can make the daily work easy or hard, the daily earnings 
for the all important livelihood large or small, by apportioning the 

109 



110 PROFIT-MAKING MANAGEMENT 

work unfairly. We are not compelled to work under a system of pay 
that provides no especial recompense for extra effort and extraordi- 
nary output, but which on the other hand often rewards (?) extra 
thought and extra skill and effort by a cut in the rate or "price," which 
leaves one working, perhaps, 20 per-cent harder than a few days 
before with a daily return in wages no larger than formerly — our 
job boss or foreman adding to the " pleasure of the incident" by 
proudly showing how he "cut that price 20 per cent, saved the com- 
pany a large sum of money, and still 'gets the output.' " 

Much has been written upon the subject of systems of pay and 
many broadsides have been fired at the old system of piece work, 
coupled as it so often is with the practice of cutting rates when the 
men begin to earn large wages. But it is far from being blown out of 
existence, for today the majority of factory managers still adhere 
to these methods. Understand me, I clo not criticize the piece-work 
system per se, but I do strongly condemn, as unfair and uneconomical, 
the habit of cutting of rates when wages become high which almost 
invariably accompanies the system. In fact, I have found the same 
tendency to exist in the case of the premium and other systems of pay, 
in some cases. The mischief is very largely caused by the practice 
of setting "original prices" or "original times," not based upon data 
scientifically determined, but upon "best previous records," an ordi- 
nary "try out" or, worst of all, the foreman's estimate. It is be- 
cause of the importance of the system of pay and because of the ineffi- 
ciency of the ordinary methods that I have tried, in the preceding 
paper, to lay down some principles or rules that may be a guide in 
securing proper results and in giving us a secure and accurate foun- 
dation upon which to build our structure of proper factory manage- 
ment. 

We must ever keep in mind that recompense to the workman is 
only one part of our total cost. A largely increased production per 
square foot of floor area means lower cost through the decreased 
proportion of overhead or indirect cost per piece. Further, it means 



WAGE SYSTEMS 111 

a much quicker movement of stock and thus a release of working 
capital through reduction of investment in stock. It means better 
satisfaction to selling department and customer through quicker de- 
liveries, and almost invariably an increase in sales with a heavy 
decrease in cost of selling per article. The average factory manager 
will term this far-fetched ; but any man who has reorganized a com- 
pletely run-down concern, and built up the manufacturing, selling, 
and financial ends of a business, knows that there is nothing so vitally 
important to the success of the business, in every direction, as the 
quickening of shop production and the possibility thus secured of 
making a quicker turn-over of working capital invested. The average 
factory manager gives little thought to this, but the financial officers 
and backers spend many worried hours trying to make both ends meet 
and wondering " where all the money goes." 

The Wage Problem in Introducing Standard Times. 

We may be sure that, having collected all of our data relative to 
standard times, we still have before us the problem how to introduce 
these — how to persuade the workmen to work to them, or in shop 
phraseology, to "stand for them." For you may be certain that if 
the work of determining these times is done accurately and thoroughly, 
the figures obtained will be so far below the results actually being 
secured in existing shop practice, that the workmen will, in all honesty, 
refuse to believe that it is possible to attain such rates of production ; 
and indeed, we too must keep in mind that the attainment of these 
standard times does not depend wholly upon the workmen, but very 
largely depends upon the efficiency of the factory management itself 
in many directions, such as supplying plenty of tools of standard 
shapes and hardness, proper machine tools and fixtures, and stock 
properly placed, as well as a method of instructions and demonstra- 
tions how the work should and can be done. 

It is perfectly obvious that not every workman can possibly attain 
for some time the rate of speed necessary to do the work within 



112 PROFIT-MAKING MANAGEMENT 

the set time limits. It is equally clear that it is immensely to the 
benefit of the manufacturer for him to get the working time down to 
the points determined upon. A flat piece rate based upon these times 
is manifestly unfair, and an attempt to introduce such rates would 
probably lead to immediate trouble with the men. I am strongly 
opposed to any plan that does not provide some form of extra reward 
to the man for attaining the standard time, this form of reward or 
bonus to be assured to him with the guarantee that no reductions will 
be made unless methods, process, or tools be changed. 

The method of pay and character of the reward will depend upon 
the character of the business and the method of pay already in use. 
I have never favored the forcing of any preconceived plan of any 
chapacter upon a factory organization or system, if it carries with it 
the necessity for ripping up existing methods and plans that have be- 
come a part of the factory's very daily existence. The old method, 
the old systems, possess a momentum that cannot be overcome. So, 
repeatedly, have I seen the modern systematizer enter the shop organ- 
ization, upset the existing methods, put in his own pretty theories, 
only to find, upon returning six or nine months later, that the mo- 
mentum of the old methods, devised by men who learned the shop's 
necessities through long and bitter experience, had been too much for 
his plans and that everything he had done had been, in some inex- 
plicable manner, swallowed up and absorbed by the rolling old system. 
•Tis only the theorizer, the man who has not " been through the mill" 
and who knows not the innermost recesses of the shop processes and 
cannot read the hidden thoughts and feelings of the members of a 
shop organization, who rashly promises to " put in a system that will 
revolutionize the shop and bring up its efficiency." 

Rather study carefully the character of the work, the ability of 
the foremen and workmen, and the systems already in use, and then 
begin to adapt the new methods to the old — apparently deduce the 
new methods from the old — and you will have the intelligent support 
of the organization. And that support that will mean progression to 



WAGE SYSTEMS 113 

newer fields of thought and activities, and not retrogression to the 
older methods. 

These remarks, fundamental in their importance, apply with par- 
ticular force to the determination of the wage system to be adopted. 
The principle of extra bonus or the attainment of standard time can 
be easily applied to almost any system of pay. Where it cannot be 
applied directly, the transition to a proper system is usually not 
difficult. 

Systems of Pay. 

The most prominent systems of pay in the United States are dis- 
cussed below. In England there are many different plans, but these 
cited herein represent the most prominent in use today. 

Day-Work Plan. — This plan, usually decidedly inefficient unless 
under special conditions, can be easily changed to a most efficient one 
by applying the bonus idea advanced by Mr. Gantt. 

Piece Work. — By this the workman receives a certain amount of 
pay per piece. A very mischievous plan if it be accompanied by the 
continual cutting of rates. It cannot be considered efficient when the 
rates are established according to methods usually practised. 

Premium Plan. — An efficient plan on many classes of work. The 
determination of standard times should, however, be made carefully. 
If the rates are determined by other methods the plan will eventually 
fail. 

The Differential Plan.— Developed by Mr. F. W. Taylor, of Phila- 
delphia; the piece price varies according to the rate of production. 
The greater the number of pieces turned out in a given time, the 
higher the piece price. This can be applied when the "intensity or 
rate of production" must be high in order to get the utmost out of 
very costly machinery, tools, etc. 

The Bonus Plan. — Explained in detail by Mr. Gantt in his valuable 
paper read before the A. S. M. E. in December, 1901. Distinctly 
a system of task work combined with the use of instruction cards for 



114 PROFIT-MAKING MANAGEMENT 

the workmen and a bonus for accomplishing the task within the time 
set for it. 

This bonus system of pay has always appealed to me as the most 
easily understood, the easiest to introduce with little opposition, and 
the most effective of all systems yet produced. It is adaptable in some 
form to almost any other system of pay that may be already in exist- 
ence in the shop. It is the easiest to introduce in case the men are 
working upon the day-work basis. Nor is it difficult to persuade the 
workmen to abandon piece work for it in case the reward is made 
sufficient. I have been introducing it into works under my control 
with marked success. 

It is of interest to note here, however, that even the closest analysis 
and study of the possibilities of assembling operation of great intri- 
cacy, such as the assembling of the counting mechanism of high- 
grade adding machines and cash registers, failed to give a positive 
indication of the possibilities of output in the case of a highly expert 
workman. The time of actual tests of the intricate assembling when 
made by the special tester fell far short of the time that could be 
easily maintained by the workman who, through years of repetitive 
processes, had gained marvelous skill. The study of his movements 
by a stop-watch expert would often show but little as regards the 
possibilities of increasing the speed of the essential operation, though 
expert observation will probably show that much can be gained by 
arranging the stock and tools properly and providing ample quanti- 
ties of stock properly inspected for quality. But the skilled assem- 
bler can and will deceive anyone not of the highest order of expertness 
concerning his possible rate of production, particularly when he has 
worked for years in the assembling of small parts of great intricacy 
and where great accuracy is necessary. Therefore, I applied a simple 
plan of offering the men an additional bonus for every half-hour they 
gained, in the form of an increase (carefully proportioned according 
to the length of the job) to their half-hourly wage rate. 

I am distinctly in favor of the bonus plan of pay when combined 



WAGE SYSTEMS 115 

with methods that determine accurately the shortest time in which a 
job can be finished. It should include a bonus plan for the job bosses 
and the foremen by which they secure bonuses in case all the men 
under them earn bonuses. This will result in the foremen immedi- 
ately giving their close attention to the inefficient workman for his 
proper and speedy training or his discharge. 



Chapter XII 

STOCK AND COST SYSTEMS AS A FACTOR IN PROFIT- 
MAKING. 

UCH has already been written of stock and cost systems, the 
subject having been thoroughly covered by a number of able 
writers and managers. I will not attempt to go into detail and 
describe any particular cost system, for that has already been well 
done. Besides, as already stated, each business presents its individ- 
ual problems so that it is better to consider the adaptation of certain 
fundamental principles to existing conditions rather than to describe 
a fully developed system with the thought that it can be transplanted 
in its entirety to any other factory. 

In fact, I shall not attempt within the confines of this chapter to 
discuss the theory of cost keeping, nor shall I deal with the problems 
of distribution of overhead or indirect charges. Rather shall I confine 
my attention to a description of a very simple and yet effective system 
of prime-cost keeping combined with the important stock-keeping and 
stock-tracing systems, which in actual practical use has proven of 
great value in a number of concerns when properly adapted to exist- 
ing conditions. 

To my mind a cost system should primarily be so devised as to 
give the manufacturer an accurate knowledge of his most costly and 
expensive operations, so that he may know unerringly these "high 
spots" and attack them vigorously. With this knowledge he can then 
devise various ways and methods of reducing costs. Without it he 
is well-nigh powerless. His stock system should enable him to keep 
down his investment to a minimum. His stock-tracing system should 
prove a most effective means of getting his stock through his factory 

116 



STOCK AND COST SYSTEMS 117 

rapidly and without delays. In other words, the practical value of 
these systems as thoroughly effective methods with which to locate 
the "inefficient spots/' and through which to attack those operations 
or methods which are excessively costly, outweighs the importance 
of the theoretical securing of costs simply in order to determine the 
selling price. The cost system should provide a club with which to 
beat down costs — the stock-tracing system another club to drive the 
factory rapidly and economically. Therefore, the stock system, stock- 
tracing system, and cost systems are so interrelated as to make it im- 
possible to consider one without the other. 

Keeping of Raw Stock. 

The stock-invoice card illustrated on the next page will show clearly 
the nature of the data required to keep such records properly. The 
problems involved are: — 

1. — The keeping on hand of sufficient raw stock. 

2. — The placing in the factory of proper amounts of stock for 
manufacturing purposes. 

3. — The keeping on hand of proper amounts of finished parts for 
assembling. 

In cases where work is ordered wholly on special contracts, and 
special material ordered from outside manufacturers, the same simple 
system can be used with modifications and will prove of equal, if 
indeed not greater, importance; for in such cases some method by 
which special raw stock from outside manufacturers can be brought 
to the shop on time is absolutely necessary. 

Necessarily the first form is the Requisition for Stock. This is so 
uniformly used as not to need illustration. It forms, however, a very 
important and necessary link to the chain. 

The next important form is the Stock-Invoice Card. This can 
be placed at each stock bin or filed in the factory office. 

The most important point to note is the "order limit," or the limit 
at which new stock must be ordered. If it be raw stock then this 



118 



PROFIT-MAKING MANAGEMENT 



limit must be determined by giving consideration to the amount of 
finished stock required in finished-stock bins, the length of time 
required to get the stock through the factory, and the length of time 
required to get the stock from the manufacturers. The "rush limit" 
indicates a dangerous condition of affairs that must be remedied by 
using extra efforts. In the case of raw stock the purchasing agent 
must be notified immediately and kept after continually. 



Stock Invoice Card 



Bin No. 



Name and Specifications- 



Am't Used per Mo Order Limit- 
Where Used Rush Limit- 



Date 



Ordered 



Received 



Delivered 
to Factory 



Order 
Number 



Inventory 



Check 
No. 



In order to have this simple system work properly great care 
must be used in making all entries promptly and properly. It will 
be noted that this very simple plan provides a perpetual inventory of 
great value in many ways. While it does not provide for the com- 
bining of factory accounts with the general accounting, still it does 
provide a very simple, inexpensive, and in most cases a sufficiently 
accurate method of keeping accounts and values. Reports of raw 



STOCK AND COST SYSTEMS 119 

stock reaching these limits must be made each night to the purchasing 
agent, a Special Rush List giving those that have reached the rush 
limit point. 

In the case of the finished stock even greater care and vigor must 
be used. The entries having been properly made, a list giving the 
amounts of those items of stock which have reached the order limit 
is sent to the stock tracer, who can ascertain whether additional stock 
should be ordered or stock already ordered hurried in its course of 
manufacture. A separate rush list showing the amounts of items of 
stock which have fallen to and below the rush limit should also be 
given to the stock tracer for his immediate and special attention. In 
many cases these lists should likewise be given to the departmental 
foremen, as they are thereby provided with the best possible means 
of knowing what work to rush. 

The system as described is particularly fitted for that class of 
manufacturing in which the work is standard and many parts can be 
carried in stock. 

In cases where the work is upon special contracts and the work 
not standard, careful consideration must be given to the time within 
which each department must do its share of work and turn it over 
to the next department, calculating of course from the given delivery 
date of the work. This time should be entered upon the Special Stock 
Tracing and Cost Sheet which will be illustrated later. 

All cost entries are made from the workman's time ticket. This 
ticket needs no description. It differs in each factory and each system 
of pay. It, of course, should contain : — 

1. — Name of the department. 

2. — Name or number of the piece. 

3. — The order number and box number. 

4. — Character of the operation. 

5. — A full description of the amount of stock received and finished. 

6. — The price or rate, and total wage. 

7. — The time started and time finished. 

8. — Name of workman, foreman, and inspector. 



120 



PROFIT-MAKING MANAGEMENT 







































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stock and cost systems 121 

Storage Platforms. 

Wherever possible it is advisable to establish storage platforms 
in each department. These should be of the height of the moving 
trucks so as to facilitate the loading and unloading. Each workman 
should have beside him only the job upon which he is working, and 
the next job upon which he is to start (with all necessary tools, 
gauges, clamps, fixtures, etc.). All other stock should be placed 
upon the platforms. The advantages are many: — 

1. — The foreman and the shop management are provided with a 
very close idea of each department's operating condition. An excess 
of stock shows an unbalanced shop condition. A shortage may prove 
a like condition in another department, and a too large capacity in 
the one under observation. 

2. — A foreman can thus easily apportion the work among his 
men so that no delays need be encountered. In addition to this he can 
easily collect the needed tools, gauges, fixtures, and clamps for the 
next job for each man — exceedingly important features. 
, 3. — Should the foreman note that he is running short of any 
particular stock adapted to any of his machines, he can notify the 
stock tracer who can easily afford him relief by rushing other depart- 
ments. This prevents the foreman from running around the shop 
needlessly. 

4. — The stock-tracing or routing system is greatly simplified. 

5. — The taking of inventories is greatly simplified. 

The Stock Tracing and Cost Sheets. 

All entries are made upon the Stock Tracing and Cost Sheets by 
the cost clerks. The rapidity with which these entries can be made 
by rapid clerks is remarkable. In one factory operating over four 
thousand men, all entries regarding immense quantities of stock were 
made upon these sheets by these clerks. A careful examination of 
this stock tracing and cost sheet shows that herein, in simple form, is 



122 PROFIT-MAKING MANAGEMENT 

contained a full history of each lot of stock in such form as to admit 
of many uses. 

1. — The stock tracer, notified by his date sheets from the stock 
clerk of any stock which is running low, can quickly determine those 
departments in which is located that stock which may be further 
along in course of manufacture. He can readily force these foremen 
to produce the stock to prevent delays. 

2. — Delays in any department are clearly indicated. 

3. — The actual time consumed and the labor cost on each operation 
are closely indicated. There is provided an analysis that will prove of 
great value in the hands of one who will systematically himt for the 
most costly points in production, with the object of devising tools or 
methods by which cost reductions can be made. The value of this 
record in inventories is apparent. 

4. — Each workman is clearly linked up with his operation. The 
columns showing "Loss" will provide an index to the efficient men. 

5. — The data relative to weight and value of raw stock may of 
course, be adapted to conditions. Whatever the plan pursued it may 
be very simple. We are thus easily provided with a prime-cost record 
of great value in devising cost reduction, and in the making of it we 
are provided with a full stock-tracing system. 

As before stated, I shall not attempt to discuss the question of the 
overhead or indirect charge as this has already been dealt with fully, 
my object being solely to present a simple and adaptable system 
which will include the solution to all of the practical problems to be 
met with in manufacturing. 

By using properly the data already upon the time ticket or stock 
tracing and cost sheet, supplementary reports of value can be made 
up such as : — 

1. — The individual workman's record, showing each man's record 
on each job. 

2. — The job record, showing the job time and cost record for 
each workman. 



STOCK AND COST SYSTEMS 123 

3. — The departmental efficiency record, in which output, number 

of employees, pay roll, and costs are compared. 
4. — General factory output and efficiency record, showing com- 
parison of output, hours work, pay rolls, and costs com- 
paring one period (either months or years) with one another. 
A factory thus equipped with a cost system that will enable the 
manufacturer to determine the proper point of high cost to attack, 
with a system of determining standard times, a method of stock loca- 
tion and tracing by which delays are avoided, the whole supported by 
modern organization and management, can defy competition. 



Chapter XIII. 
THE UPBUILDING OF A SELLING ORGANIZATION. 

N a chapter as brief as this must be, it is, of course, out of the ques- 
tion to discuss at all fully the broad general question of methods 
of selling. Again, each business has its own peculiarities which make 
it necessary to apply special methods. At the same time, much can 
be said on that question of tremendous importance — the upbuilding 
of a highly trained, efficient selling force — that will be applicable to a 
business of any character. Different methods of making different 
manufactured goods make necessary some change in the plans, but 
in almost every case the fundamental elements are the same. 

Methods of selling manufactured goods may broadly be divided into 
four divisions: — 

First, where the goods are sold direct to the consumer by sell- 
ing representatives of the manufacturing concern itself. This may 
be either through the company branch houses, or commission or 
salaried men, all of whom are employed and paid by the company. 
In this case, while considerable working capital is tied up and the 
stock of goods must be heavy, at the same time the selling division 
is directly under the control of the management and the territories 
themselves secure a company representation possible in no other way. 

Second, selling to exclusive agencies, who themselves employ 
salesmen to deal direct with the consumer This plan has much 
merit, although it is often difficult to devise plans whereby the 
agencies themselves may be forced to cover their territories and to 
develop an efficient selling department. It is also important to 
notice here that in such cases the manufacturing company very often 
does not come into close contact with the individual members of the 

124 



THE SELLING DEPARTMENT 125 

selling division of such agencies, and thus their methods are not 
properly impressed upon the men. A connecting bond between 
such agency salesmen and the manufacturing concern is of great 
importance. This becomes especially so in cases of sudden termina- 
tions of contract, etc. 

Third, selling to jobbers. This plan is susceptible of such variety 
that it hardly needs consideration. Close connection between the 
jobber and the manufacturing company is very necessary. Constant 
and skilful attention must be paid him in order to secure adequate 
and permanent representation. 

Fourth, direct advertising, selling by catalogues, etc. A dis- 
cussion of this method of marketing product need not be considered 
here. 

Whatever the business, whatever the method of selling, the 
importance of a highly trained efficient selling division stands out 
paramount. In developing a selling force, we must consider: — 

1. — Training of salesmen. 

2. — Training of sales managers. 

3. — Developing of a proper system, whereby both salesman and 
sales manager can be properly checked up — the former, to ascertain 
if he is properly covering his territory, and getting his full quota of 
business, securing proper prices and terms, and keeping his old and 
new customers satisfied ; the latter, to see if he has the proper grade 
of salesmen employed, proper control over them, proper methods of 
training them; also to note if he is securing an adequate volume of 
business at such prices and with such economy in operating expenses 
as to guarantee a sufficient profit. 

Training of Salesmen. 

Singularly enough, the majority of concerns today spend tens of 
thousands of dollars in advertising and in forcing the attention of 
the public upon their goods — in "creating the demand" — and yet 
they fail to train their sales employees — the men and women upon 



126 PROFIT-MAKING MANAGEMENT 

whom they must absolutely and finally depend as "closers" — so that 
they may know the " talking points" of their goods, the best methods 
of presenting their arguments, and the surest methods of finally 
" clinching the order;" The unknowing sales manager often dis- 
misses the argument in favor of training of the salesmen with the 
trite remark "salesmen are born, not made." A mischievous belief! 
Granted that some men are by nature better fitted for selling than 
others, those men are only too few. Training would surely improve 
their efficiency. Unfortunately, however, we manufacturers who 
market our own goods can find but very few of these " born sales- 
men," and are obliged to rely upon the "average salesman" for the 
most of our business getting. Such being the fact, it must be 
apparent that the average selling division needs badly a scientific and 
systematic method of training, in order that the large proportion 
of "average salesmen" may be brought to as high a degree of effi- 
ciency as possible. Nor does the advantage to be reaped stop simply 
with the training of the employees in selling. The meetings which 
this system calls for, if managed aright, are sure to prove of immense 
benefit in arousing a healthy and stimulating enthusiasm in the 
employees affected. An honest desire and intent on the part of these 
salesmen to "put in the best licks for the House" gives an impulse 
to their activities that nothing else can supply. This feeling can be 
instilled into them by a skillful, tactful sales manager. Do not forget 
that a sullen, listless, or disloyal member of your selling force affects 
your profits immediately. If you have many such, your department 
is costly and inefficient. The effect of your thousands spent on 
advertising is nullified by such conditions. On the other hand, a 
highly trained, loyal, interested and active selling force is one of the 
most valuable assets a firm can possess. That such a selling organi- 
zation can be developed, even from one of a peculiar degree of 
inefficiency, has been proven by a long personal experience in several 
lines of business and very close observation of the results obtained 
in other modern business concerns. 



THE SELLING DEPARTMENT 127 

John H. Patterson, the brilliant president of the National Cash 
Register Company of Dayton, Ohio, was the first business man 
to grasp the possibilities that lie in the training of the salesman. 
Through his genius, his company has developed probably the greatest 
and most efficient selling organization in the business world today. 
His example has been followed in the manufacturing business by 
such concerns as the Burroughs Adding Machine Company and the 
Herring-Hall-Marvin Safe Company, with decided success. Work 
of this character has been successfully applied to "Hapgoods," the 
firm doing a large employment business. Indeed, its essential prin- 
ciples can be adapted to the conditions of a business of any character 
in which the marketing of goods plays a large part. 

Development of a Selling System. 

While each business requires special study and special methods, 
the general plans of the "Science of a Selling System" can be clearly 
pointed out so that they may be adapted. The two essential fea- 
tures of this system are " Salesmen's Demonstration Meetings" and 
"Salesmen's Training Department." While the "Salesmen's Training 
Department" is in fact the more important feature, I place the 
"Salesmen's Demonstration Meetings" first, because the training 
department is, nine times out of ten, the outgrowth of the demonstra- 
tion meetings. The logical beginning of this system is with these 
meetings, because the points to be used in the training department 
are invariably secured from the discussions arising in these meetings. 
Again, these meetings serve as a gradual introduction for the later 
training department, and so accustom the selling force to the methods 
themselves that there arises but little opposition to the training 
department when it is first proposed. Each salesman, too, feels that 
he has had some part in the development of the training department, 
inasmuch as his own arguments are often used, and so thorough 
support can be elicited in place of the violent opposition that may 
be expected if any arbitrary methods are used. Woe betide the sales 



128 PROFIT-MAKING MANAGEMENT 

manager and the sales system if he starts at the " other end of the 
line," and attempts to force these methods upon his selling depart- 
ment before the members are ready for it. 

Salesmen's Weekly Demonstration Meetings. 

The points that will be brought out in regard to these meetings 
need no elaboration, as their merit is self-evident. 

First, a time for these meetings must be set and constant attend- 
ance insisted upon. The sales manager must invariably be present 
and take part in discussions of all matters of importance. If possible, 
some higher official should be present once a month, in order to 
inject a new interest and new quality of enthusiasm into the salesmen. 
It will stir up both salesmen and sales manager tremendously if they 
are compelled to exhibit before someone high in authority. 

Second, it must be kept in mind that these meetings are for the 
training of the salesmen (and incidentally the manager) and helping 
them over their difficulties, for arousing interest and enthusiasm, 
for giving the salesmen a chance to "blow off steam" on any trouble 
they may have that is affecting their efficiency, and for securing from 
them suggestions for the improvement of the business. A sample 
weekly programme follows : 

Programme op Salesmen's Demonstration Meeting. 

1. — Announcements. By Sales Manager. 

2. — Description of new products and fields they are designed to fill. By Sales 

Manager. (Suggestions and criticisms from salesmen requested.) 
3. — Demonstration of salesmanship. By Salesman — J. H. Smith. 

By Customer — G. R. Brown (Salesman). 
Censors — R. Fowler, H. White, 
(a) Selling the product to the customer whose business is carefully selected 
and who desires a good article, 
or (b) Selling customer asking for low-priced article, a higher-priced and more 

profitable product, 
or (c) Selling second-hand product to customer. 
or (d) Selling customer asking for second-hand product a new product. 



THE SELLING DEPARTMENT 129 

or (e) Selling customer new product, taking old product in exchange, at profit- 
able allowance figure, 
or (f) Selling customer against strong competition, another salesman entering 

the demonstration as competitor's salesman. 
Note : These demonstrations may be varied by having the same points illustrated 
as "Company-office Sales," where all stock and other paraphernalia are present, or 
as sales at the customer's office, where the salesman must depend upon illustrations, 
samples and catalogs. 

4. — Discussion of demonstration, first, by the appointed censors, Fowler and 

White, and second, by each salesman personally. 
5. — Discussion of week's business; why individual salesmen have not made 
their quota of sales and difficulties met by salesmen, from blackboard 
individual-sales record and from individual-sales reports. 
6. — A talk by the sales manager or some high-grade salesman on general impor- 
tant points of salesmanship, such as: 
Investigation of prospective customer's business and his methods. 
The proper "lining up" of selling arguments so that the "selling climax" 

may come at the right time. 
Methods of introduction, or "the approach." 

Methods of getting the prospective customer's attention and making demon- 
strating arguments. 
Methods of using closing arguments and "getting the signature to the order." 
Ways to meet certain arguments and objections of prospective customer. 
Ways to meet competitors' claims and arguments. 
Methods of cultivating a territory. 
Importance of "satisfied user." 
Importance of "knowledge of the business." 

Advantages to be gained by paying close attention to such seemingly 

small points as tact, dress, industry, perseverance, talking too fast or too 

much, answering customer's questions quickly, and a multitude of similar 

matters, perfection in which is so important. 

7. — Discussion of different competitors' products, their talking points and how to 

controvert them, their defects and how to prove them. 
8. — Suggestions and complaints. 
9. — General subjects such as advertising, etc. 

Keeping in mind the main objects of this sales system — the crea- 
tion of interest and enthusiasm and the training of salesmen — an 
examination of the preceding suggested programme leaves an explan- 
ation almost superfluous. 

In making announcements and describing new products, much can 
be done to create a lively interest in the company's affairs on the 



130 PROFIT-MAKING MANAGEMENT 

part of the salesman. A frank and full discussion of new products 
or proposed new designs will often prevent serious mistakes and will 
almost invariably result in suggestions that will make the product 
more marketable. 

The suggested variations of "Demonstrations of Salesmanship" 
are also self-explanatory. Note carefully the appointment of cen- 
sors. It is also especially desirable to hear comments upon demon- 
strations from each salesman. If the sales manager handles matters 
right so that the salesmen enter into this programme in a proper 
spirit, there need be no fear of salesmen becoming angry over fair 
criticisms. The " customer" can be selected from the sales office. 
He must be given to understand that he is not to aid the salesman 
in any manner, direct or indirect, and that he should bring up all 
the arguments and objections against buying that he himself has 
learned from his own customers. In a business where the product 
covers a broad field, embracing a number of widely different kinds 
of business, where a discussion of the business system enters into the 
sales, the "customer" and the character of the business can be 
selected so that in the course of a short time the demonstrations will 
cover the entire field and a full line of argument be brought out for 
each line of business. The character of the business and the condi- 
tions surrounding it should be thoroughly understood before begin- 
ning. Often a salesman who has had a particularly hard nut to 
crack will suggest the conditions and himself act the part of customer 
against a good salesman, in the hope of either "stumping him" or 
getting some good pointers. Especial attention may well be given 
to methods of convincing a customer that he should purchase a 
higher priced and more profitable product. Inasmuch as the selling 
expense remains the same, or very nearly so, an effective method of 
accomplishing this will result in a much larger proportion of profit. 
The most modern concerns pay a great deal of attention to this 
point and have developed a highly scientific and effective method 
for accomplishing it. This applies also to a business in which 



THE SELLING DEPARTMENT 131 

exchanges for old products enters into a large proportion of the sales. 
This is often a puzzling feature, and unless thoroughly understood 
results in large hidden losses. 

Great interest can be aroused by the introduction of a salesman 
representing a strong competitor, who is supposed to do his best. 
Such exhibitions are not only highly instructive, but also inspire 
salesmen with a confidence in their own goods. 

It is important that two demonstrations be often given, one con- 
ducted by an old and skilful salesman and one by a newer member 
of the selling force. This not only aids greatly in the education of 
the newer salesman, but often acts as a great spur on the older man 
not to be outdone by the newer ones. In conducting these demon- 
strations care must be used to see that no slipshod methods be 
allowed to creep in. The " sales" must be conducted with all the dig- 
nity and formality of a real transaction from the beginning, in order 
that the best form of "approach" or introduction of the subject may 
be observed. 

A better method of instilling selling confidence into a man is 
hard to devise. After he has had to appear several times before 
a body of his selling companions and his superior officers he gains 
confidence rapidly and his attacks of "nerves" are things of the past. 
Such methods quickly develop the "quitter," for his improvement or 
elimination from the organization. They certainly show up the "dead 
wood" quickly. 

The talks by sales manager or high-grade salesman upon general 
selling points, as noted under programme item 6, will prove of great 
benefit to new salesmen. The points brought forth — taken by a 
stenographer — are of great value later when organizing a method 
of training. The items given embrace only a very few of the impor- 
tant topics that may be discussed, but are given to illustrate clearly 
the nature of the talk suggested. 

Discussion of Competing Product. — While it is not often advisable to 
instruct salesmen to talk against competitors' goods, I regard it as 



132 PROFIT-MAKING MANAGEMENT 

absolutely necessary that salesmen be thoroughly posted on the char- 
acter of competitors' products. Very often true statements of defects 
in such articles become necessary. 

Suggestions and Complaints. — This section deserves more consid- 
eration than can be given it at this point. Nothing is more vital to 
the progress of a company than the proper and conservative meeting 
of the actual market demands and the improvement of product so as, 
if possible, to keep ahead of the demand. No one knows the needs 
of the market or the advancement of competition as does the sales- 
man. A systematic plan to secure these suggestions from the body of 
salesmen will prove of very great value. The same may be said 
regarding complaints. Legitimate complaints should be "aired," and 
when the causes are ascertained prompt steps taken to rectify the 
troubles. Many a firm today prefers to shut its " business ears and 
eyes" and refuses to hear of troubles or to see perfectly obvious 
defects which are continually having a disintegrating though hidden 
effect upon the business and organization. 

The details of these meetings should be invariably taken down in 
shorthand. I have found it of great value to have sufficient copies 
of the proceedings of each meeting made to allow of their being dis- 
tributed to the sales managers in all parts of the country. 

It is important that the general sales manager consider it his 
particular duty to read carefully all minutes of these meetings and 
then to write to each local sales manager, commenting upon them, 
(in each case mentioning names of salesmen). The effect upon both 
manager and men is very beneficial. 

The quality of the demonstration affords a very good proof of 
the calibre of the salesmen in each district and thus provides the 
clearest kind of an index to the quality of salesmen throughout all 
the points of the organization. Again, the salesmen are impelled to 
do their level best, knowing that the general sales manager will him- 
self note the character of their work, even though he may be thou- 
sands of miles away. By such a simple means the influence and 



THE SELLING DEPARTMENT 133 

power of the general sales manager will be felt throughout the entire 
selling organization. 

Salesmen's Training Department. 

While much good can be derived from such weekly meetings, 
the progress of the men toward high-grade selling is necessarily 
slow. The influence toward rational methods is not constant enough. 
Again, constant individual attention should be given the new men 
at the beginning so that they may have the full benefit of such 
methods early in their selling career. Experience has shown that 
the only rational plan for developing salesmen rapidly and upbuilding 
a strong homogeneous selling department is to develop a strong 
training department for salesmen. This department should be inde- 
pendent of the influence of any local sales manager, but should be 
under the direct supervision of the general sales manager. It should 
be his " selling right hand." All local managers should be thoroughly 
trained in this department's methods so as to supplement its activity 
in their own local districts. All salesmen should be trained therein. 
Particular attention should be paid to the export trade agencies. 
Some firms establish training departments in the several foreign 
countries. Personally, I prefer to have even representatives of export 
agencies taught at the home office, so that they can not only get the 
best possible course of instruction but also may come under the 
direct strong influence of the home-office executives. 

The first step (and often the most difficult) is to find the proper 
instructor. No greater mistake can be made than to attempt to use 
a cheap man. This work requires a man with the widest selling 
experience, coupled with great tact, patience, and teaching ability; 
a man whom the salesmen will respect for his ability. The outline of 
his work will demonstrate the necessity for having a man of sterling 
ability. 

His first work will be to prepare a "Manual" for salesmen. This 
must contain: 



134 PROFIT-MAKING MANAGEMENT 

a. Strong points on general salesmanship. 

b. A thorough and careful explanation of each product and its adaptation to all 

different lines of business. 

c. An exceedingly thorough explanation of the "talking points" or "selling 

arguments" of each product. 

d. An analysis of competitors' products and a comparison with the manufactur- 

ing company's product. 

e. A careful and scientific analysis of the best methods of introduction to a pros- 

pective customer so as to gain his attention and interest, this forming the 
"approach." 

f. Statements of the best methods of marshalling the talking points together 

so that a demonstration of the product's merits may be made to the cus- 
tomer — this forming the "demonstration and argument." 

g. A thorough and complete analysis of the best "closing arguments" and dis- 

cussion of various ways to " get the order signed." 

h. A full list of the most common objections to making a purchase and ways of 
meeting these objections. After this plan is worked out, it will astonish 
many to note how simply the objections to purchasing on the part of pros- 
pective customers can be classified. It will also astonish the average sales 
manager to note how many different and excellent answers can be made 
to these objections by taking the answers to these by many managers and 
salesmen in different parts of the country. Whenever a salesman meets 
with some new form of rebuff, arguments to meet a new condition can 
quickly be secured by referring the question to the different managers for 
settlement in their weekly demonstration meetings. 

i. Much space may well be given to a thorough and logical explanation of best 
methods of raising a customer desiring a low-priced product to one of 
higher price, "Raising him up the line," as it is called. Really scientific 
work can be done along this line. Methods of handling second-hand sales 
and exchange sales should also be treated fully. 

It will be noted that almost all of these invaluable data can be 
secured from the salesmen's demonstration meeting reports. 

After the selection of the instructor and preparation of the manual 
the balance of the work is largely routine. 

First, each man — new or old — must be made to learn the manual 
" backward and forward." No halfway learning can be tolerated. 
He should then be thoroughly drilled in the "approach," "demon- 
stration" and "closing" arguments under differing conditions along 
the lines noted in the Programme of Salesmen's Demonstration 
Meetings. He should be compelled to go through these in the regular 



THE SELLING DEPARTMENT 135 

demonstration meetings before the entire body of salesmen. This 
process will require from two to six weeks depending upon the man 
and the character of the business. He is then started out in a terri- 
tory and carefully watched. It is well also at times to have him 
attempt to make a sale at the office so that his methods may be noted. 
After about a week of this experience the instructor should accom- 
pany him on his regular rounds so as to note his methods. Failure 
to attend to important points may thus be observed. The instructor 
should then illustrate the proper methods by taking the selling end 
himself with several prospective customers and closing the sales. 
After the salesman has been in his territory for a full month the 
instructor should spend another period with him. 

After these men are distributed to different territories the local 
manager should give them the same attention. 

The instructor should visit the several territories from time to 
time and note closely the salesmen's method of demonstration, both 
in the weekly salesmen's meeting and before their customers. A 
constant and close study of weekly sales reports, supplemented by 
the reports of the weekly demonstration meeting, will clearly indi- 
cate the weak spots needing attention. 

The local managers should from time to time be called into the 
home office for conventions. These can be made exceedingly helpful 
to both company and managers. They are the backbone of the selling 
division and they cannot be watched, trained, inspired, and worked 
with too much. Not only must they be driven on the question of 
sales, but they must also be held responsible for economy in manage- 
ment. 

The devising of proper sales systems is a subject in itself that can- 
not be fully treated here. 

It is essential though that mention be made of the two forms from 
which spring many branches of the system, namely, the Salesman's 
Daily Reports. One covers sales made and gives the important details 
as to the customer and his business; the other covers cases of failure 



136 PROFIT-MAKING MANAGEMENT 

and gives the reasons for non-success. The two forms are shown 
below : — 

Salesman's Daily Report of Sales. 

Name of Customer Rating Date . . . 

Character of business and system used 

What Sold Date Delivery 

Higher Priced Machine needed (Date) 

Duplicate Machine needed (Date) 

Send advertising matter as follows: 



Salesman's Daily Report of Failure. 

Name of Customer Rating Date . 

Character of business and system used 

What needed? Why not sold? 

Date to return 

Send advertising matter as follows : 



Couple these two reports with a comprehensive list of prospective 
customers, and you have the best foundation for a comprehensive 
and valuable sales system. Many other forms will naturally be 
added to these and many different methods used for properly tracing 
up "prospective customers" noted from these reports. 

Through your prospective customer list, coupled with the sales- 
man's daily reports, you can determine whether or not each man is 
properly covering his territory. If he is not, you can make him do so. 
The daily reports data enable you to classify these prospective cus- 
tomers so that you may be sure that they receive the proper attention 
at the proper time and the proper kind of advertising matter pending 
the next visit of the salesman. These reports are capable of indefinite 
amplification along lines which will be of immense benefit to the busi- 
ness, especially when used in connection with a sales system along the 
lines described. Such systems will admirably supplement the factory 
methods advocated in preceding papers, and will serve to unif}' the 



THE SELLING DEPARTMENT 137 

entire plan of organization, business, and method along such logical 
lines that there can be but one result — Progress ! 

A selling department built up along such lines is the best guar- 
antee of high prices and good profits — a bulwark of strength against 
competition, and the strongest possible business foundation, especially 
in times of industrial depression. 



Chapter XIV. 

EFFECTIVE ORGANIZATION IN THE EXECUTIVE 

MANAGEMENT. 

/ ~]F S HE preceding chapters have dealt somewhat fully with the 
-*■ defects existing in the average manufacturing concern as 
regards its organization and its selling and factory methods and sys- 
tems, and have indicated some methods of overcoming these troubles 
that have been found effective in everyday practice in the upbuilding 
of run-down concerns. 

This discussion would not be complete unless the executive divi- 
sion, whether it consists of one man or twenty, were given some 
treatment. For indeed the troubles — the defects, both in organiza- 
tion and methods, that may be met with in selling force or factory — 
exist in particular strength in many an executive division, and cause 
infinite trouble. The small jealousy that impels one man or one group 
of men to underrate the value of work done by others, the lack of 
unity of purpose which often leads one set of men to block surrepti- 
tiously the good work of another group, often works incalculable loss. 

The larger and more complex the executive end of a business, the 
more important does it become that great care be used in organ- 
izing it in such a manner that each member of this group shall be 
allowed to do his own work without interference from others, and 
yet, at the same time, that each member shall bring to the business 
and to the most serious problems in the business his best judgment on 
the business as a whole, and pour into a common reservoir his rea- 
son for objection, his particular plan, his best thought, his enthusiasm, 
his best self, for "the good of the business." 

As long as the executive force work in unison, the balance of 

138 



THE GENERAL EXECUTIVE 139 

the organization will generally do likewise. Let there be discord and 
lack of harmony amongst the heads of the business, and there will be 
an instant lining up of forces in opposition one to the other from 
one end of the working body to the other. This lack of harmony in 
the executive division arises for reasons similar to those that disin- 
tegrate the balance of the organization and cause it to lose so much of 
its latent power. The only cure, in my opinion, is the old one of " get- 
ting together." The general ideas already expressed in earlier chap- 
ters of this book relative to the formation of committees are particu- 
larly applicable here. 

It is my intention to illustrate briefly the work of a group of execu- 
tives, showing how the work of each one is related to and interlaced 
with the work of all. Before doing so, however, it is advisable to con- 
sider a few suggestive forms of reports from different sections of the 
organization which are very necessary in order that a full grasp upon 
the business may be held by those managing it. Of course no attempt 
to outline fully any system of reports generally applicable could be 
successful. The general forms of the ones suggested, however, are 
adaptable to many differing conditions. 

Executive Reports from Selling Division. 

As a fundamental form of report invariably necessary I submit one 
which shows how much business must be done in each line of product 
and in each territory. This must show the volume of sales required in 
detail. As against this there must be set the allowable factory costs, 
together with allowable costs of extras of all character. In addition 
to this, there must be carefully calculated out the allowable selling 
expense, including all items, such as salesmen's and managers' 
salaries, commissions, traveling expenses, advertising, etc. There 
must further be shown the allowable general expense, such as rent, 
insurance, taxes, telephone, telegraph, office salaries, etc. In all 
cases allowable percentages should be carefully worked out. 

The "allowable amounts" must be calculated from close knowl- 



140 



PROFIT-MAKING MANAGEMENT 



edge, first, of how much profit the concern should make; second, of 
how much profit should come from each territory considering the 
possibilities of the business and expense of conducting it. When 
these computations are made for each territory, covering selling prices, 
factory costs, selling and general expenses, together with percentage 



Required Sales. 
Amounts (Classified). 


% 


N. Y. Branch. 


% 


Phila. Branch. 


Etc. 
















Factory Costs. 
Amounts (Classified) .... 
All other Cost Items 
Classified 


















Gross Profits 


















Selling Expenses 
(Classified). 

(a) Salesmen, salaries. . . . 

(b) " commissions 

(c) " expenses . . . 

(d) Mngrs., salaries 

(e) " expenses .... 

(f) Advertising 














Total Selling Expense 














General Expenses 
(Classified) 
(a) Rent, Insurance, 
Taxes 














(b) Office Salaries 

(c) Telegraph and tele- 
phone 




(d) Miscellaneous 

(e) Legal, etc 








Total General Expense 














Total All Expense .... 














Net Profit Required . . . 















STANDARD SELLING RECORD. 

This Record is used, first, for showing required sales and allowable expenses with 

percentages ; second, for showing actual sales made and actual expenses incurred 

and percentages. The use of the same form facilitates comparisons. 



THE GENERAL EXECUTIVE 141 

calculations, showing the proper relationship of all of these items, you 
have a solid foundation upon which to work and from which to drive 
for business. Of course this should be carried much further within 
the selling division. Each salesman should have his record to strive 
for. His showing should be based upon the same idea. 

Having these data, the next step naturally is to supply the exact 
information as to sales record and expenses. The sales record, as 
far as the selling division is concerned, should, of course, be made up 
daily, the expense items being roughly calculated upon a percentage 
basis. The monthly sales record should, however, be complete. It 
should follow exactly the lines of the standard selling record shown 
opposite, the sales data being taken from the sales records, the ex- 
pense data directly from the accounting department. This leaves 
in the mind of each manager of a selling division no iota of doubt as 
to what must be done, and by comparison he sees how much he has 
gained or how far he has fallen behind. Such repqrts provide the 
executives with accurate and usually much needed indices of sales 
conditions. They are especially valuable where the business done is 
in the nature of long-time contracts under which deliveries are made 
for long periods after the actual sales are recorded. 

Other selling-division reports, such as those showing the distribu- 
tion of sales, the covering of territories, the development of the selling 
efficiency of the organization, etc., and the condition of competition, 
would naturally be made and need no discussion here. 

Factory Reports. 

In preceding chapters and in my articles published in The Engineer- 
ing Magazine in 1902 the question of factory reports has been quite 
fully dealt with. From the data secured through the suggested 
methods many interesting and important reports are derived. These 
are: 

1. Factory Output and Efficiency Report. — This report may be 
adapted to meet the requirements of departmental efficiency reports 



142 



PROFIT-MAKING MANAGEMENT 



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THE GENERAL EXECUTIVE 143 

also. It should compare the results for various periods with the 
results of like previous periods, either as a total or an average. By 
noting the number of employees, pay rolls, and material purchases, 
and comparing the figures with values of output and inventories, a 
very accurate idea may be secured as to the relative efficiency of the 
entire shop or any department. 

2. Progress-of-Work Report. — To every executive managing any 
shop, and particularly those working upon long-time delivery contracts 
a weekly progress-of-work report will prove invaluable. If this report 
were to be made up from the cost records, the task would be a great 
one. It can be handled very easily and simply, however, by the 
committees. Each foreman should have a keen knowledge of the 
progress of his portion of any job. These men, together with a bright 
secretary, in one of their regular meetings can easily and quickly 
formulate such a progress-of-work report as suggested. The advan- 
tages of such reports are many. 

First, they provide an alert executive with a most important index 
as to progress of work and enable him to "pound the shop" for any 
work that he can note is falling behind. 

Second, they force upon the attention of the foreman individually 
the progress of each job in his own department. They compel him to 
accumulate a very useful knowledge of his own work — oftentimes 
lacking. 

Third, they place the factory in possession of data making it possi- 
ble to give the selling department delivery dates which can be met. 

Fourth, they are an invaluable aid to the treasurer, enabling him 
to predict with some degree of certainty when his collections will 
come due. Especially valuable are they in cases of large contracts 
calling for partial payments as work progresses. 

Such reports, covering a very wide variety of work, have for 
a long time been made out by our factories on Saturday morning, 
arriving on my desk the following Monday. Meetings with interested 
heads of financial and sales divisions immediately follow, and as a 



144 



PROFIT-MAKING MANAGEMENT 





Dates 




FROM 




...TO 




New York 
Branch. 


% 


Philadelphia 
Branch. 


% 


And all other 
Selling Divisions. 


Deliveries (Classified) . 












Total Deliveries 












Factory Costs (Classified). 












Total Factory Costs 












All other Cost Charges 

(Classified), 

e. g., Delivery — Finishing. 












Total All Other Costs 












Total Delivered Costs 












Gross Profit 
















Deduct Selling Expense 
(Classified). 
Salesmen, salaries and commis- 
sions 












(Depmts.) (a) 




(b) 




(c) 




Salesmen, expenses 




(Depmts.) (a) 




(b) 




(c) 




Mngrs., salaries 




" expenses 




Advertising 








Total Selling Expense 












General Expenses 

(Classified). 

Office Salaries 












Rent, Insurance and Taxes. . . 

Telegrams, Postage, etc 

Stationery and Printing 

Light, Heat and Power 

Maintenance 




Adjustments and Losses 

Legal 




Miscellaneous 








Total General Expense 












Total Selling and General 
Expense 














Profit (black). Loss (red) 






! 







EXECUTIVE PROFIT AND LOSS REPORT. 



THE GENERAL EXECUTIVE 145 

result there exists the closest possible touch between the several divi- 
sions upon the one important point — Production. 

Executive Report. 

The report of paramount importance is the one illustrated on the 
preceding page. It should be produced monthly from the books of 
the concern. The several divisions are self-explanatory. 

Comparing this with the selling-division reports, there is provided 
a full index of business conditions. Couple it with factory reports 
already mentioned, and a monthly balance sheet follows. 

Having now described in a general manner the detail, I can per- 
haps best illustrate the value of the methods advocated by quoting a 
programme of action taken "from actual life" by a committee of 
executives of a very large concern. The committee is formed of the 
president, the general manager, the treasurer, the sales manager, and 
the factory manager. The understanding is general that heads of 
departments shall frequently be called into their conferences. A typ- 
ical programme is as follows : — 

President; acts as chairman. 

General Manager. — Critical discussion of business conditions, with especial 
reference to those sections in which the records show a decided falling off in 
business. Discussion with sales manager as to the reasons for this condition. 
Discussion develops that a new form of competition has arisen in that par- 
ticular region. Steps are taken immediately to meet this before it grows to 
greater strength. 

General discussion of executive report. An analysis shows where the great- 
est profits in the business lay and where the greatest losses occurred. Discus- 
sion of expense items shown on executive report. 

Sales Manager. — (a) Reports on sales conditions in various territories and orders 
coming therefrom. 

(b) Competition; what must be done in way of new methods or new pro- 

duct to meet it. 

(c) Progress of training department. • 

(d) Expense. 

Factory Manager. — (a) Discussion of factory output and efficiency. 

(b) The progress-of-work report. 

(c) Report on progress of new factory methods and inventions. 



146 PROFIT-MAKING MANAGEMENT 

Treasurer. — A discussion of financial outlook with especial reference to the future 
deliveries as outlined on progress-of-work report. 

In this concern, formerly handicapped severely by a lack of knowl- 
edge of such important points, a revolution was worked through the 
adoption of the simple and direct system. 

And so I maintain that the adoption of these simple and natural 
methods will change an organization burdened with jealousies, handi- 
capped by misunderstanding, held back by lack of knowledge, lack of 
progress and general inefficiency, to one comparatively free from 
personal enmities, led by a sense of certitude as to actual condition in 
field and factory; constantly impelled, even in the smallest details, 
toward a greater degree of efficiency and surcharged with the feeling 
of true enthusiasm — the will to work "for the good of the company." 



LIBRARY OF CONGRESS 

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